Advantages of Unsecured Tenant Loans

By: Devora Witts

It is commonly said that there is something for everyone and this is also true when it comes to the loan industry. Unsecured Tenant Loans are specially designed for those who do not own a property but instead rent their home and thus have no collateral to secure a personal loan. These loans have many advantages for tenants and provide finance to an otherwise credit-less niche.

Home-ownership guarantees approval even with less than perfect credit, this is due to the fact that an asset securing a loan provides the lender with enough guarantee that his money will be recovered one way or another. However, since the loan industry has become increasingly competitive, the differences between secured and unsecured loans have faded and loans for tenants have become more and more common.

Advantages

Unsecured Tenant Loans have many benefits that make them very attractive even for homeowners. This particular fact is somehow amazing: even though they are probably the only source of finance for non-homeowners other than payday loans, they are not an expensive source of finance and since there is no risk of repossession due to their unsecured nature, many homeowners prefer them over secured loans.

The interest rate charged for unsecured tenant loans is lower than pay day loans, lower than cash advance loans and lower than credit cards. It is only somewhat higher than secured personal loans. But, as stated above the difference is not that significant and besides, non-homeowners cannot apply for secured loans.

The loan amount you can request ranges from a couple of thousands to hundreds of thousands. It only depends on your credit score and on your income. Outstanding debt may also limit the amount of money you can request but the income is the main factor that will determine whether you can take another loan or not.

As with the loan amount, the loan length also depends on your credit score and income. A good credit score provides you with flexibility so you can decide whether you want a short term loan or a long term loan. However, a limited income will imply that the loan length has to be extended as needed to keep the monthly payments affordable.

Drawbacks

As explained above, the interest rate, loan amount and loan length are not really drawbacks when you compare unsecured tenant loans with secured personal loans. It is true that the interest rate is a bit higher, that secured personal loans let you borrow as much money as you want up to the whole value of the asset used as collateral and that the loan length can be extended up to 30 years. However, though an unsecured tenant loan cannot provide these benefits up to these boundaries, it can get close enough if your credit score lets you. And this one is really the only drawback.

Credit score will limit your ability to get finance with these loans. You can get an unsecured tenant loan even with bad credit but the amount of money you will be able to request will be significantly lower than if you had good credit and the interest rate charged will also be a lot higher. Yet, it may be the only source of income available for a non-homeowner with bad credit, except for payday loans which have even higher interest rates and shorter repayment programs.

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