Smarter Unsecured Finance for UK Renter In the UK

Unsecured tenant loans in the UK are aimed at non-homeowners to help them tide them over during financial emergencies. The acceptance rate of applications from tenants is not as high as that of property owners due to a risk of eviction, but the probability of being approved is much better when you demonstrate that you are not a frequent mover.

Table of Contents

1. Features of tenant loans
2. Situations where tenants benefit from tenant loans
3. What if you are a subprime borrower?
4. Can tenants apply for unsecured loans to consolidate debts?
5. What are the benefits of unsecured loans for tenants?
6. How to apply for unsecured loans as a tenant
7. Steps to take before applying for unsecured loans for tenants
8. Wrapping up

Personal loans for tenants work the same way as they do for homeowners. They are not secured against any collateral, which means approbation hinges on your creditworthiness and affordability. Since these loans are aimed at funding small emergencies, the maximum size is not more than £1,000.

Features of tenant loans

Here are the features of instant tenant loans:

• Subprime borrowers can also apply for these loans. However, interest rates will be slightly higher.
• Lenders run a soft check as long as the loan amount is less than £500. For larger loans, detailed credit inquiries are run.
• The turnaround time is quite short. You will most likely receive money the same day you initiate the loan application process. Therefore, they are also known as same-day tenant loans.
• The borrowed sum is paid down in one fell swoop. Some lenders might require you to put down the debt in fixed weekly or bi-weekly instalments, but spreading the cost over months is few and far between.
• Renter loans cannot help build your credit score as they cannot reflect your repayment behaviour because of a lump sum payment, but non-payments can wreak havoc on your credit rating.

Situations where tenants benefit from tenant loans

The ultimate goal of these loans is to supply cash in case of the unforeseen. Circumstances when you will most likely need these loans include:

• • To cover the cost of the rental deposit
  • To move out
  • To cover your medical bills and other unexpected bills
  • To cover unexpected small repair expenses
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What if you are a subprime borrower?

Some lenders provide bad credit tenant loans as well, but they come with high interest rates. A poor credit history calls your repayment capacity into question. A lender might surmise that you have a propensity to abdicate your obligation.

Though most of the lenders make their lending decision based on your current financial circumstances, they cannot overlook your credit report because having a strong income source and an inclination to repay the debt are two different things.

Tips to improve your chances:

• No other credit should be opened at the time of applying for these loans.
• Target to minimise your credit utilisation ratio, not more than 25%. The lower the better.
• Try to borrow less than you need.

On no account should it be interpreted that you will have these loans signed off on if you meet the aforementioned criteria. A lender might ask you to arrange a guarantor whose credit history is impressive. Guarantor loans minimise the risk on the part of a lender as they can call on the guarantor to discharge the debt in case you make a default.

However, bear in mind that this could impair your guarantor’s credit rating as well. This is why most people are loath to act as a
guarantor.

Can tenants apply for unsecured loans to consolidate debts?

Tenant loans are small, unsecured loans that are employed to meet small, unexpected expenses, such as a car repair. The maximum amount of money with these loans cannot be more than £1,000, which is required to be discharged in one go.

However, consolidation loans, on the other hand, are aimed at merging existing outstanding debts to ease payments by spreading the cost over a period of months.

Although quick loans for renters and consolidation loans are unsecured in nature, they have been designed to solve different problems.

Tennant loans cannot be used for debt consolidation, as their structure involves a lump-sum payment that conflicts with consolidation purposes.

What are the benefits of unsecured loans for tenants?

The following are the advantages of online loans for tenants in the UK:

• You do not need to secure them against any asset.
• They are convenient. It takes a few hours to complete the process, and then funds are disbursed immediately.
• As you know how much money is to be paid back at the end of the month, you can easily accommodate your budget to it.
• You do not have to be tied to longer repayment periods.

How to apply for unsecured loans as a tenant

In order to apply for small unsecured loans as a tenant, you should:

• Be a resident of the UK
• Be of a legal age to apply for a loan, which is 18
• Have a valid rent agreement
• Have an active bank account

Steps to take before applying for unsecured loans for tenants

As these loans are quite expensive, they can throw you into debt if you throw caution to the wind. Therefore, it is enjoined that you be careful about your affordability. Though a lender would assess your affordability, you cannot completely rely on their decision-making. In addition to affordability assessment, you should:

• Check your credit rating, make sure that your credit report does not consist of errors and unidentified accounts. Lodge a complaint to the credit bureau if any discrepancies come to your notice.
• Compare deals from different lenders. This will help you choose the most affordable deal. Every lender has their own criteria for assessing the risk. Some deals could be more expensive than others.
• Borrow only what is needed. It is advised against borrowing more than you need, despite affordability, because high interest rates increase the cost of the debt.
• Try to avoid using the loan for paying rent arrears, as it is a recurring expenditure. You might end up falling into an ongoing cycle of debt.

Wrapping up

If you are a tenant and want to borrow money to meet small emergencies, you can consider small unsecured loans. Make sure that you will not fall behind on payments. Do research before applying for them to ensure that you get an affordable deal.