Financial life starts getting hard as a tenant. You may be new to this scenario as a student or a graduate. It involves saving enough for the monthly rent alongside meeting other survival needs. It is challenging if you are habitual to living in a university accommodation.
Moreover, what if you encounter an emergency in such a situation? Unexpected expenses may affect your finances. You may panic if not prepared. Here, you need a reliable partner to tap when needed. Thus, check on tenant loans. These are specifically for individuals operating as tenants in the country. You can get one without pledging collateral. The blog details tenant loans and how you may benefit from them in financial distress.
What do tenant loans imply?
Tenant loans are loans for non-homeowners needing immediate cash to meet basic emergencies. It is an unsecured loan with competitive interest rates. It is because, unlike homeowners, you cannot stake your home as collateral on the loan. Security in the form of an asset reduces the risk for the provider. Hence, you may get better interest rates compared to non-homeowner loans.
However, tenants may fetch affordable interest rates by proving the affordability. Individuals earning good incomes and stable finances may qualify. Additionally, having a consistent place as a rental home helps get instant approval. Provide valid earning proof to claim small cash support.
You may get up to £5000 for basic requirements. For example- you may use the loan for meeting the rent payments, paying credit card bills, small home repairs, etc. Later, you may repay the loan in monthly instalments.
What are the prime benefits of loans for tenants or non-homeowners?
Tenant homes are the best way to manage your financial needs without worries. You don’t need to be a homeowner to qualify. It eases the deal for the many individuals seeking urgent cash support. Instead, the loan providers prioritise other aspects for you. It may include employment history, rental history, and income. Here are other benefits of a non-homeowner loan:
1) You don’t need a guarantor
It is one of the greatest reliefs that you share on the loan. You don’t need a guarantor as a mandatory option to get the loan. If you meet the basic income and affordability criteria, the loan provider doesn’t ask for a guarantor. It means you can counter the needs without disclosing them to your relative. It also grants you mental peace and financial dominance.
2) Same-day funding support
You don’t need to wait a day or two to get the funds in your account. Instead, you get one quickly after the loan approval. This is because these are small loans with restricted payout numbers. It does not require much documentation or proof to qualify. Only reliable income proof and rental status will do. You may get the funds within 35 minutes of the approval.
3) You don’t lose your home
Unlike secured homeowner loans, you don’t need to stake the home to qualify. Instead, you can get one without risking your precious belongings. So, even if you skip a payment or two, you don’t share the fear of losing the property. However, defaulting may impact your credit score. The creditor may impose a court order to retrieve the funds. It may last for 6 years on your credit profile. Thus, try to ensure regular payments.
Can a tenant loan application damage your credit score?
No, your credit score remains the same at the time of loan approval. This is because the loan provider provides non-homeowner loans with no credit check facility. It means the basic checks involve only information like- income, money requirement, contact number, account number, etc. Accordingly, he provides you with a basic quote that you may qualify for.
It does not involve detailed credit report checks that may hamper the credit score. However, you must be conscious after the loan approval. Missing a payment or skipping any due to negligence may mean extra costs. The loan provider may charge a penalty and the interest dues rise on the loan. It means you eventually pay a higher amount than you ought to. Eventually, as a result, the credit score drops. Thus, try to be regular with the payment and apply consciously.
Aspects you must consider to get a tenant loan quickly
Qualifying for a tenant loan requires you to know a few aspects. Identify the affordability first. How much can you afford to pay on the loan? Individuals earning basic income or part-time may consider this aspect carefully. It is a commitment that you get into. Thus, analyse the best amount you may qualify for and borrow accordingly. Are other aspects to consider while taking a tenant loan:
1. Hold a valid bank account
The most important aspect of getting a tenant loan is holding a valid bank account. As a permanent country citizen, you must have a relevant separate personal bank account. Students on Visa must have a valid passport and other documents. It will help you qualify for the loan immediately. Moreover, you should not have any connection with the joint accounts. This is especially true with bad credit scores.
2. Calculate the amount you can afford
Unless you know the amount you can comfortably pay on the loan, you may fail. Yes, the loan provider may reject your application if you cannot afford to pay the amount needed. Thus, before applying for a loan, check the affordability. You can either pre-qualify with the right loan expert or calculate it yourself using a loan calculator.
It will help you know the expected loan amount you may get, monthly payments and the ideal loan duration. This approximate amount will help you decide the right one to borrow. It prevents you from attracting more interest payments.
3. Get a guarantor if you lack income
Usually, you don’t need a guarantor on the loan. However, certain aspects like unemployment, no income and new finances provoke one to consider the option. You must provide valid proof to afford the repayments to get a loan. If you don’t earn one, you would need to guarantee the payments. Consider your loved ones or family members who may help you.
An ideal guarantor is a person with a good credit rating and income. He should have a detailed credit history to help you with the loan. He will be responsible for the payments if you cannot pay the dues. However, he will not pay if you can repay the loan without worries.
Having a guarantor reduces the overall loan costs and helps you fetch better interest rates. It could be a helpful option for students or the unemployed.
4. Choose the right repayment term
Identify the best repayment term within which you can repay the dues. The longer the repayment term, the more you pay as interest. Analyse your finances, monthly bills, and income. Check and choose a comfortable repayment term that’s neither long nor short. It should comfortably fit your finances. Factor in the possibility of missing a payment and then choose one accordingly.
Bottom line
Thus, tenant loans are one of the best ways to meet the needs of a renter. You don’t need to be a homeowner to qualify. Instead, your present earnings, financial management and rental status help. You may get instant cash against the affordability. However, be conscious of the hidden payments or extras that you pay over the loan. It may increase the overall loan payment.
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