Advantages of Tenant Loans

A tenant loan allows borrowers with no collateral and even poor credit standing access to financing for almost any purpose. Tenant loans are a lending product popular in the United Kingdom, and have grown in popularity for non-homeowners.

No Collateral Required

Traditional lenders require some sort of asset to secure a loan. All loans have a degree of risk for the lender. The larger the loan, the longer the payout period or the worse your credit standing, the more collateral a lender will require. Homeowners often use the equity in their property to secure large and small long-term loans for home improvements. But what of renters and other non-property owners? A tenant loan does not require home equity as collateral, or even any collateral. This opens up the possibility of borrowing to many who previously had limited options. 

Poor Credit History Isn’t a Barrier

Traditional lenders will not consider you for a loan with a poor credit score or checkered credit history. One arm of the tenant loan industry is designed for those with no credit history or a low credit rating. You can expect to pay up-front processing fees and the interest rate will be above market. However, if other alternatives are limited, a tenant loan can get the borrower over a rough patch.

Be sure to deal with a reputable lender. Some tenant loan originators collect the fee and then find a reason to deny your loan. Deal with companies known for treating customers fairly.

Quick Approval and Funding

Often, borrowers seeking a tenant loan need money quickly. A typical tenant loan borrower faces unexpected bills shortly before the next payday and needs money to help bridge that gap. Tenant loans require a two-page, online application; approval can come back within hours and funding to your bank account can be done by the next day.

You are paying for this ease and speed through the upfront fee and the higher interest rate. However, if you find yourself in financial need, it can be worth the cost. It’s important to mange your budget so that you can pay off the loan and to pay down highest interest rate loans first.

Flexible Repayment

As with a credit card, you can pay off your tenant loan at your next payday or make a minimum monthly payment. That flexibility allows you to hold onto to cash when you need it and reduce your debt when you can afford it. However, making minimum payments typically means interest expense is increasing the total amount you owe. Don’t fall into the trap of digging yourself deeper into debt month after month. For most, a tenant loan is a short-term solution to a short-term, cash flow problem.

Flexible Payout Periods

While a tenant loan typically is for the small borrower, the industry has grown to offer large loans as well, sometimes valued at hundreds of thousands of dollars with payout ranging up to 25 years. You will need to have good credit and demonstrate the ability to repay to get a large, long-term tenant loan. But for the non-property owner, such a tenant loan provides an alternative to a bank, where collateral will be required.


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