Loans for Tenants With Collateral

By: Baidehi Creeper

If you are a tenant of local councils, housing associations or other similar government landlords, maximum possibility is that you are not a home owner. The other situation may be that you may be a home owner but not at a place where you are staying as a tenant. This means, you may have a home of your own in other city not in the city in which you are residing as a tenant.

Also, you would agree that the key feature of money is that it is fickle and dynamic. You may have sufficient money today but, say, after a fortnight you do not have money to pay your monthly installment or other dues. The basic idea is that any body may need money any point of time irrespective of his employment or self-employment status and earning. So at time, when you are a tenant you may need to borrow money form lenders. But, lenders willing offer to landowners not the tenants, since the lenders consider loans to property owners as less risky than loans to tenants. Because, property owners have a fixed asset, therefore it is highly unlikely that property owners would default. Even if property owners default, lenders have the option of recovering their due, which is not so in case of tenant. So, there was a time when borrowing a tenant loan, without offering any collateral, was not only tedious but also cumbersome and costly compared to others.

However, considering the huge market of unsecured tenant loans, lenders, now willing offer loans to tenants even without any collateral. In case of collateral, borrowers have to offer any of their assets to lenders as security against the loan borrowed so lenders do not have much risk even of defaults. Even if, somebody defaults, lenders have the option to dispose off the collateral to recover their losses.

All applications for unsecured loans for tenants are examined on a case-to-case basis. Though, the over loan scheme may remain same, but the loan amount, duration of loan, rate of interest and monthly installment may vary from borrower to borrower. However, your chances of obtaining a loan will be greatly enhanced if you can answer YES to the following:

&bullYou are either a salaried person or self employed, in other words you have a permanent source of income.

&bullHave lived at your current address for over a year.

&bullhave a savings bank account

&bullCan provide bank statements to show regular payments

&bullHave a credit record.

Lenders do not ask for any security against the loan offered to tenants, in case of unsecured loans for tenants, which make the loan risky for lenders. To compensate against this increased risk, lenders charge a little higher rate of interest compared to a loan in which collateral would have been offered. This makes the unsecured loans for tenants a little costlier for tenants.

In case of unsecured loans for tenants, loan amount is decided by the lender by taking into account various factors such as monthly income of borrower, his monthly rent, any active loan and its monthly payment, other expenses etc. Similarly, amount of monthly payment is decided on the basis of loan amount, loan duration and the amount which the borrower can pay comfortably every month.

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