Before we get into shopping for a tenant loan, here's a quick definition of what exactly that is: a tenant loan is a type of loan offered to borrowers that do not have anything of significant value to offer as collateral on the loan. Due to the fact that there is no collateral involved, these borrowers often must deal with higher interest rates because of the higher amount of risk being assumed by their lenders. With that bit of background, here are some tips to help you expediently and cost-effectively shop for this type of loan.
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Things to Keep in Mind About Tenant Loan Shopping
When you are shopping around, know that you will need to do a lot of research and hunting in order to find the lender that will give you the best loan rate. Interest rates differ significantly from lender to lender, so be sure to do your homework, and find out who is offering the best rates. A person who needs help finding the right lender can employ the services of a loan finder. This type of person or company earns its keep by helping you get the most competitive rates in the industry. This will help shorten the tenant loan shopping process considerably.
Requirements for Finding the Best Rate
Though the loan applicant will not need to submit any proof of security or collateral to his preferred lender, one factor influencing the interest rates offered is his credit history. A person who lacks a decent credit history is at a disadvantage because lenders look for your borrowing and repayment habits as represented by your credit history. Better terms are provided to people with good credit history. Borrowers need to be able to prove that they receive a stable income (such as being a full-time employee). The bank account of the borrower should be able to accommodate a direct debt card facility. You should have evidence that you have been living at your current residence for quite some time, such as having a land line contact number. This is required my many lenders so that they can see that you have got steady habits and you are not prone to jumping from one place to another.
Other Things to Keep in Mind
Most of the time, you will have to accept higher rates of interest on your repayments because a tenant loan is an unsecured form of personal loan. This means the lender is accepting a higher level of risk of nonpayment than a secured loan borrower would. The borrower does not have to worry about losing his/her property because their property is not put up as collateral (and most of these borrowers lack sizable assets to put up as collateral anyway). However, a borrower who does not fulfill his repayment obligations may have to answer to legal action initiated by the lender. This is why searching for low interest rates is quite crucial. There is less paperwork and a shorter waiting period involved in tenant loans. It is possible to go online to apply for your tenant loan, since many lenders operate from websites now. In the UK, the maximum amount borrowed can equal 50,000 British pounds. One factor that will dictate the amount you can borrow is your monthly income. Usually, the loan amount should be equivalent to 70 to 75% of what you earn per year. The interest rate you have to shoulder per month may be influenced by the repayment period granted to you or that you requested from your lender. Repayment periods may last from one year to 25 years maximum. You may be able to improve your credit history by taking out a tenant loan. In order to improve your credit score, you need to make payments on your loan strictly according to schedule, so you can prove to the lender that you are a low risk borrower. A person who succeeds at repaying his/her whole loan amount may eventually qualify for other types and amounts of loans with lower interest rates. People often resort to tenant loans when they are desperate for an influx of funds with no collateral. If you eventually qualify for other types of loans, you may be able to get better terms that will further improve your financial condition.
To sum up, if you have got little to no personal property of high value, such as a car or a house, you may qualify for a tenant loan. The downside to a tenant loan is that you will most likely be forced to endure paying higher interest due to the fact that you're a high-risk borrower in the eyes of your lender.
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