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Unsecured Loans - Tenants Can Have One Too
By Andy Silk
It sometimes seems that the entire world is against you if you rent your home and you need a tenant loan. Everything seems geared to helping homeowners. They have property on which to secure their loans but tenant loans are different. Without collateral they can only apply for unsecured loans.

Is that really a problem however? Well, yes and no. Firstly, the amount of money you wish to apply for could be affected by there being nothing to secure the loan against. Consider a homeowner applying for a secured loan. In this scenario, dependent upon the customers' credit history, income, equity etc, the lender may allow the borrower to borrow between £5000 - £150000 or more. Quite a considerable sum of money when you think about it.

With an unsecured loan however, the lender has much more of a risk to be concerned about since they cannot force a sale of any collateral in the event of a default. The end result is that even if you have a squeaky-clean credit history, there will be a much lower ceiling on the amount that the lender will most likely be prepared to let you borrow. For tenant loans, the amount you could apply for are often somewhere between £500 - £15000.

On the other hand, there are advantages to tenant loans over secured loans. For a start, as we are not using any property to secure the loan against, it means we don't now need to organise an independent valuation of the property. This will speed things up considerably. In addition, as you do not need a valuation or to run searches on the property, there are no costs that need to be borne by the borrower to take out the loan. It can be much cheaper to make an application for an unsecured loan than to apply for a secured loan.

Now, it's starting to get interesting. You could have the money in days as opposed to weeks and be able to use it on whatever you want. Commercial or business loans carry different rules so beware if you need the money for your business.

We mentioned a little while ago that the lender would probably take a look at your credit rating. This is one of the most critical parts of the decision making process as to whether

you can have the unsecured loan. Every time that you apply for finance or you make a payment towards one of your credit agreements including unsecured loans, credit cards, store cards, catalogues etc, your credit history is updated and is available to be viewed by any prospective lender via a credit reference agency such as Experian or Equifax.

It's very important to make sure that you do not miss any repayments as this will show up on your record and your new lender will take them into account when judging whether to lend to you in the future. Dependent on how many missed payments, defaults and CCJ's you have on your credit file, they could reduce the amount they are prepared to lend to you, increase the interest rate they offer to you to reflect the greater risk they may face in lending you the money. They may even refuse to offer you the money if they perceive the risk to be too great that you may default.

To apply, just fill in the enquiry form on one of the online broker's sites. They will most likely be back in touch with you in only a few minutes to offer you a decision in principle and to guide you through the remainder of the process. You will still need to complete and sign the credit agreement that they will need to send to you in the post but in real terms you could be receiving your cheque within only a few days. You can then get on with whatever you wanted to use the money for. Things like buying a new car, motorbike or caravan. You could be going on a fabulous holiday or even be using the money to consolidate your existing credit into one more manageable monthly repayment.

Whatever you want to use the money for, tenant loans and unsecured loans could be the solution you've been looking for.

This article is free to distribute but please maintain links where they exist in the article. Thank you.

Andy Silk is FinanceGuru for FeelGoodLoans.co.uk, specialists in all types of loans and mortgages for UK homeowners , tenants and business owners.

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