A tenant is someone who doesn’t own their own home and instead rents somebody else’s property. Normally, tenants’ are known as those individuals who rent property from a private landlord, employer, the council, housing association, or even the Ministry of Defense. However, you are also ranked as a tenant if you live at home with your parents or share with a friend, providing you pay them rent (even if it’s smaller payments than the standard amounts). Tenant loans are a form of unsecured loan designed specifically for such individuals. Therefore, the primary difference between a tenant loan and other unsecured loans is that they are only available for tenants; homeowners cannot apply for this type of loan. Tenants and other non-homeowners have always been considered to be at a disadvantage in comparison to homeowners when it comes to borrowing money; the introduction of this form of loan prevents the isolation of tenants from the rest of society in regards to borrowing money.
Recent research highlights that the number of tenants worried about the cost of maintaining their household and lifestyle has significantly increased over the past year. The recession and the resultant increase in rates has left more and more Tenants worrying over meeting monthly Rental Payments, Council Tax, Utility Bills and other expenses such as a TV License. The public sector cuts have undoubtedly had a strong effect on the rental sector recently. For these reasons, there has been a small but significant rise in the number of individuals seeking out various unsecured loans, including tenant loans. Tenants use such advances as short term solutions to their financial problems until longer term solutions become affordable and available.
The Benefits of a Tenant Loan: Like all unsecured loans there is no collateral required to secure the loan and the money gained can be used for almost anything, from short term unexpected expenses such as healthcare costs or MOT payments, to longer term financial solutions such as debt consolidation. Debt Consolidation Tenant Loans are particularly popular for renters as they reduce the number of monthly repayments into one manageable repayment plan. Furthermore, Tenant Loans are becoming much more accessible and available through the increased presence of lenders operating online. Most lenders now operate through the internet and have simplified application forms for the ease of the consumer. For this reason, the process of obtaining a tenant loan is not only easy but much more efficient.
Some advisory tips when looking for a tenant loan: Most lenders now operate online which has made it much easier for loan scams to operate by illegitimate firms. Therefore, before you do any business with an online firm, do some research on the company to check if they are a registered firm. Moreover, read a few online reviews on the business, weigh up the complaints with the positive reviews. As always, it is strongly recommended to do your homework on your personal finances before you share any information with an outside party. Ensure that you are realistically aware of your personal financial strengths and weaknesses, for example, do you have credit cards, bank overdrafts, landlord or council rent arrears, personal loans etc? Prioritising your finances is vital. Also ensure that you know your exact reason for looking for a tenant loan, are you looking to consolidate outstanding debts, pay unexpected fees or are you only interested because they do not require you to secure any collateral? In addition, borrowers are advised to be extremely careful of the various punitive, or ‘small print’, measures included in the contract in case of missed payment, such as delinquency and default terms.
Like most unsecured Loans, the amount that a Tenant can borrower is usually fairly limited. They can vary in the range of £1000 to £2500 and have a standard repayment term of 1 to 10 years. Additionally, as this type of loan is not secured with any property, lenders neutralize the risk to them by placing extremely high interest rates on the loan. Depending on the lender, these interest rates are held between 7.7% and 18.3% APR. As with all unsecured loans there are tight restrictions to abide to when looking to obtain a tenant loan. You must be able to prove that you are earning a stable monthly income of a minimum of £1000, although there are options available for unemployed tenants. In addition, you must have resided at your current rented address for over 12 months. You must also be over the age of 18, a full UK Citizen and have a valid and active bank account. Lenders that specialise in offering unsecured loans to people living with parents will undoubtedly require additional information on your employment history, such as the length of time in your current job, any pay increases and they will also require detailed information on your monthly living expenses and how much your parents actually charge you in rental payments.