Unsecured Loans: the Best Option for Tenants

By: Mary Wise

Even when it comes to unsecured loans it is a lot easier to get approved for a home owner than for a non home owner. Nevertheless, there are unsecured loan lenders specialized in dealing with loans for tenants and here are some tips on how to find them and how to get approved.

Unsecured Loans Defined

Unsecured loans are not guaranteed with any asset, thus, the risk of repossession does not exist. This does not mean that the lender cannot take legal action in order to recover his money. However, such a legal process would be significantly longer and more expensive than with secured loans.

Since there is no asset securing the loan, the risk involved for the lender is higher and so, the interest rate charged for the loan will also be significantly higher. Though the gap that exists between secured loan interest rates and unsecured loan interest rates has decreased, it is still an important factor and you should shop around for the lowest interest rate available whenever possible.

As regards to loan amounts, generally you cannot request a high loan amount with unsecured loans. However, though this remains true, lately lenders have lessened their policies on this matter. Besides, the loan amount will depend on the overall value of your assets (albeit they are not used as collateral) and on your credit score and history.

The loan length also presents certain restrictions on unsecured loans that are not present on secured loans. As with the interest rate and loan amount, the loan length will be determined by your credit score and history and within certain boundaries, it is negotiable.

Where to find the lenders

Since unsecured loans do not have the best terms on the financial industry, it is best if you compare many different loan offers before deciding which lender will you work with. In order to do so, you need to request loan quotes and compare costs, interest rates, loan amounts and loan lengths and see which proposal best suits your needs.

There are many lenders that do online loans and even those who do not process loans online have web sites where you can see what they offer and find contact information. The smartest thing to do is to search online for lenders since this way, you will be able to find many loan offers with the best terms. There are even some online companies that offer access to a wide range of lenders listed all in the same site. This is probably the easiest and more comfortable way to go.

Tips for Approval

In order to get approved you need to focus on improving your credit score and history as this is what will determine the lenders decision. Make sure your credit report does not show wrong information that might lower your possibilities. Contact credit agencies immediately if you find inconsistencies and request them to fix the mistake.

Apply only for the money you need, it is easier to get approved for a lower amount than for a higher amount. You should request only the amount you need for urgent expenses. Future expenses can wait; besides, your monthly payments will increase your credit score and let you get another loan on better terms in the near future.

If your credit score is too slow, get yourself a co-signer that trusts you in order to get approved and get better terms. If the co-signer has a good credit score, you might as well get better terms with lower monthly payments that will be a lot easier to afford.

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