Getting a loan if you are a tenant can be tricky, but it's not impossible - here's how you can find and compare what's available.
While lenders do prefer to offer loans to homeowners. there are still plenty of options if you don't own a property and need to borrow money.
While it's a little harder to get loans without being a homeowner, because lenders see you as a risker prospect, there are still lots of different lenders to choose from.
This means that you will have to compare non homeowner loans. but it's not as straightforward as picking the first one you see - there are important factors you have to take into account first.
What's your situation?
Before you start the search for the best deal, you need to consider the implications of applying for a loan.
Think about your income and how able you are to keep up your regular payments. If you are employed fulltime, do you earn enough to set some aside for each instalment?
If you work part-time or are looking for a self employed tenants loan, how able are you to commit to making monthly repayments?
When you are confident that you know how much cash you need to borrow, how able you are to pay it back and what sort of timespan would be best for you to repay it, you can compare tenant loans on the market .
How much do you need to borrow and for how long?
You need to weigh up how much cash you need to borrow and how long you need to pay it back.
You need to work out whether you can afford higher monthly payments or would be better off making smaller amounts and spreading the cost.
Your decision will have a big impact on how much you repay overall, so you must be sure before you even consider applying.
Making a tenant loans comparison
Lenders providing tenants loans will only let you borrow if you are up to scratch and meet their criteria.
This might include being a certain age, earning a certain amount and/or having a good credit history. You need to make sure you fit the bill before you apply, the top things you'll
need to check include:
Even the best loans for tenants will have a maximum borrowing limit of Ј25,000, because these are unsecured, rather than secured against a property.
Companies will also have minimum limit in place, so if you're looking for tenant loans of less than Ј2,500 it will rule out a lot of lenders.
This means you should ignore the loans which don't offer the amount you need to borrow and look elsewhere.
When comparing loans for tenants online you'll need to check how their repayment terms differ before applying.
Some lenders give you the freedom to pick a time period of anywhere between one and ten years, while others might offer less choice.
If you already know how long you want the loan repayment period to be, you should discount the lenders which can't offer this.
Certain lenders who provide guarantor loans to tenants will only offer much shorter terms, sometimes up to a year, to repay the whole amount. However as these are specialist loans they charge a lot more interest.
Annual percentage rate (APR)
Once you've narrowed down your options based on how much you need to borrow and for how long you can start looking for the cheapest interest rate.
Most companies will have similar representative annual percentage rates, but these should be taken with a pinch of salt as they are only a 'typical' rate and only have to be offered to 51% of applicants.
When it comes to applying for a specific loan, the APR could be very different and considerably higher, which is why it's important that you compare what each lender is offering to get the best possible deal.
Consider a credit card
Before applying for a loan, it's worth considering other options that might work out better for you.
Credit cards with 0% interest on purchases or balance transfers for an introductory term provide a viable alternative, especially if you're looking at borrowing a smaller amount for a fairly short amount of time.
These cards don't add interest so you can focus on paying off what you owe without worrying about paying extra. Our guide Loan alternatives outlines other ways you can borrow the cash you need.