Tenant loans are basically unsecured loans that do not require collateral. Lenders usually offer loans against property. This gives them a sense of security. A property guarantees that the borrower will repay the loan. Such a loan against which a property is offered is known as a secured loan. Secured loans offer several benefits. You can take out a secured loan if you are a homeowner by offering your house as collateral.
Not everyone owns a house. If you are a tenant or are living with your parents, you will have to go for an
unsecured loan. Tenants do not own a house and therefore, they cannot offer a property as a security. The amount of tenant loans usually ranges between £1,000 and £50,000. The loan period varies between a few months and a few years. Since no security is offered, the borrower's credit score becomes very important factor in deciding on whether or not to grant him a loan.
You need to have a good credit score if you want to get a low rate tenant loan. Apart from having a clean credit history, you need to show your source of income. Other things that you need to obtain a tenant loan are salary slip and residence proof. It is a little difficult to get a tenant loan since it is not backed by a security. The rate of interest on a tenant loan is higher than the rate on a secured loan. You cannot obtain a large amount of tenant loan.
Tenant loans have to be repaid within a short period of time, which increases the amount of monthly installments.
Tenant loans are used for many purposes. There is no restriction on the use of a tenant loan. It can be used for home improvement, to buy a car, to pay for a holiday trip, to finance your child's education, and so on. You can also take out a bad credit tenant loan. A bad credit history includes arrears, default, county court judgements, bankruptcy, etc. The rates of interest on such loans are the highest because of two reasons – no security and a poor credit score of the borrower.
The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting uk-loan-market as a finance specialist.
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