As if the problems of renting weren't bad enough, loan providers have also started to treat renters like their children. Because loan providers don't care, it seems like the tenants don't have any loan options left. People often look at renters with suspicion because they don't own their own home. What if the renter leaves after taking the money? Legal process can be a relief, but it often takes too long.
But not all loan providers think the same way about renters. These lenders are the ones who give loans to renters. People who don't own their own homes are called renters. People who still live with their parents are also considered renters, unless their parents are willing to let them use their home as collateral. In the UK, a loan for renters is called a tenant loan.
A UK tenant loan is basically an unsecured loan, which means that the borrower doesn't have to put up anything as collateral. When you get a secured loan, the clause about collateral is always there. Whether the borrower's house or something else is used as collateral, there is always the fear that the loan provider will take the collateral away for good. How else do you think the person who lent the money will get it back? There are no worries like this with a UK tenant loan because there is no collateral.
One more benefit of tenant loans, which is also true of unsecured loans in general, is that they tend to be approved more quickly. Since there is no collateral to be worth, the loan providers can save a lot of time on the approval process. When we compare this to a secured loan against a home, we find that valuing the home takes as long as all the other steps put together. So, if you take out a tenant loan in the UK, you can expect to get the money much faster than if you took out a secured loan.
Compared to the past, there are now more lenders in the UK who offer loans for renters. The lenders have realised that they can get more customers if they are willing to take some risks.
Tenants in the UK can get loans for amounts up to £25,000. So, renters might not be able to get a big loan like a secured loan. This is one way to lower the risk of giving tenant loans. Tenant loans can't be used to pay for tasks that need more money. A tenant loan is best for making small home improvements and combining debts.
The UK tenant loan will also have a very high rate of interest. Most of us know that the amount of risk involved in a loan deal has a big effect on the interest rate. We talked right away about how hard it is to trust tenants. This means that the renters put the lenders at a higher risk. So, the rate of interest that renters have to pay is higher. Borrowers can avoid changes in interest rates by making use of the different options that come with interest. Rate locks, capped rates, discounted rates, etc. are all ways to make high interest rates a little less painful.
UK tenant loans will not be easy to get if you have a bad credit history. The only way for lenders to know if they can trust borrowers is to look at their credit history. If your credit history is bad, it will be hard for them to decide whether or not to lend you money. Credit flaws might have been overlooked if there had been enough collateral. Does this mean that renters with bad credit have to give back everything they took? They would have to do this if there weren't a few loan companies willing to give them money with this much risk.
In the UK, tenants who want to get good deals on loans must be good at researching. There are a lot of loan companies that try to take advantage of tenants' problems. Most of the time, they will raise the interest rate too much or include too many hidden fees. The best deals on UK tenant loans are found by borrowers who can beat these lenders.
