I am a tenant, how am I able to get a personal loan?

Should you be a tenant, you are not able to get a secured personal loan, for the simple reason that a secured loan needs your home to be collateral.

Loan providers like secured loans, because if they don't get the repayments, they have the option of repossessing your home. This makes the loan less risky for the providers, thus you can obtain lower interest rates.

Just because you can't get a secured loan doesn't mean that there are no options available to you as a tenant. Unsecured loans do not need security provided against them. This lessening of borrower risk is counter-weighted by the increase in lender's risk. This is why unsecured loans tend to feature higher interest rates.

Another feature of these products is that the loan provider will be a great deal less patient with any defaults on the loan. Since they don't have the security of your home to fall back on should they not receive their money back, they will be more aggressive in forcing you to pay up.

The unsecured loan application will be processed quicker as well, because there is no requirement to have your home valued before the decision. However, a corollary of this is that you'll find it more difficult to get approval for a loan. More detailed credit checks will be carried out on you and the decision will be more hard-nosed than with secured loans.

The credit rating process uses your address, work and financial product history in order to assign you a score, which is used to make a decision about lending to you. To help you predict what could happen to you in a credit check - if you have changed jobs frequently and/or changed addresses frequently, it will be looked upon negatively, as your income is not viewed as reliable in the long term, and you are seen as less reliable. Ideally, you will also have had only a few loans and cards, and have never defaulted on them.

Should your credit rating be low, or you have bad credit, then you can still get loans. You'll have to pay a higher interest rate, and the choice of loan provider will be a lot smaller, but it's still not a bad idea, as should you repay the loan on time and reliably, then your credit rating will improve.

To find the best loan product for you, use a comparison service. This will allow you to enter your personal details and loan needs, and tell you what the cheapest loan available to you is, and hopefully also the criteria you need to meet in order to be approved for the loan.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

© AskFinancially.com 2008

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