Home ownership level has fallen to its lowest level for decades here in Britain – there have never been as many people renting their properties either from the council, the local housing authority, or the private sector as there are now. Because there are so many of us now paying rent at the end of every month instead of a mortgage payment, a whole new sector of lenders has sprung up who want to work with tenants.
In this article, we examine the ten most frequently asked questions about tenant loans we received here at Loan Princess together with important information on how Loan Princess can shop around for the best deal on your behalf.
10 FAQS on loans for tenants
Who are tenant loans meant for?
The types of borrowers taking out tenant loans are borrowers renting the property they live in, borrowers living with friends, borrowers living with their parents, borrowers living in shared accommodation, and borrowers living with extended family members.
No matter what your current living arrangement, tenant loan companies will still want to see you registered to vote at the address you’re applying from. If you have not registered to vote, you should do so straight away by visiting this website.
Can I get a bad credit tenant loan?
Yes. There are dozens of reputable, Financial Conduct Authority-licensed tenant loan providers in the UK which are very happy to work with people with a bad credit rating.
These companies understand the difficulties of building up a good credit rating for tenants because, unlike homeowners whose mortgage payments are recorded on their credit files, tenants’ rent payments are not. This gap in your credit file makes it more difficult for a lender to understand as much as they want to about how you handle money because the records kept by the credit references agencies aren’t as in-depth.
You’ll find tenant loans easier to get the less you move around. For example, if you have had 2 addresses in the last three years, lenders will feel more confident about approving your application than if you’ve had 6 addresses.
I am in a council house. Can I get a bad credit tenant loan?
Absolutely yes (depending on individual lenders’ application procedures). You are at no disadvantage applying for a tenant loan if you live in council property than you are living in the private rented accommodation sector.
Do I need to be employed to take out a tenant loan?
In nearly all cases, you do need to be in some form of employment, preferably full-time, to be considered for a tenant loan. However, most lenders in the sector are happy to count benefit income you receive into your affordability calculations in addition to the money you earn from your job.
Am I restricted on what I can spend the money on?
No. You are free to spend the money you receive in any legal way you choose to. You must, of course, make sure that, before you take out a tenant loan, that you can afford to meet all of the future repayments on fill and in time.
What are payday loans for tenants?
Payday loans for tenants, for normally between £50 and £1,000, are a type of loan where you make one repayment of the amount you borrowed and the interest accrued on your loan all in one go.
Tenant payday loans are usually repaid in full on your next wages day or within 35 days of receiving your money – whatever you agree with your lender.
What are short-term loans for tenants?
Short-term tenant loans, sometimes called tenant instalment loans, allow borrowers an advance of generally between £250 and £2,500 with repayments stretching over 12 months after the money has arrived into the borrower’s bank account.
Do tenant loans qualify for extra protection?
Payday loans for tenants and short-term loans for tenants usually fall into a protected category called HCSTC (high-cost short term credit) loans which grant borrowers extra protection as set out by the governing Financial Conduct Authority.
Those extra protections are:
- interest rate capped at 80p per day for every £100 borrowed
- maximum penalty of £15 for missed repayments and lenders are not allowed to attempt to take money from your account more than twice without your expressed permission beforehand
- when added together, the interest charged and any penalties for missed repayments (or other items) can not total more than the value of the original loan.
Do I need a guarantor for a tenant loan?
No, you do not need a guarantor for a tenant loan.
Is it worth shopping around for tenant loans?
Yes. There are dozens of companies offering payday loans and short-term loans to tenants and you can play them off against each other to secure the best rate for you. In fact, please read below to find out how Loan Princess can do just that for you.
Finding the best tenant loans without a guarantor
In our opinion here at Loan Princess, it’s always better never to involve a friend or family in your financial affairs. Those relationships have taken years to build up as it has taken years for the trust to build up and be consolidated between you and these important people in your life. Money worries are one of the main reasons behind why couples get divorced and, according to MarketWatch, in a survey of American respondents, 1 in 3 people would end a friendship if their friend owed them $100 or less.
It’s just not worth it. Just because you’re a tenant doesn’t mean that lenders look down on you and your application. If you’re a tenant with a less-than-perfect credit history, there are, literally, dozens of companies in the UK who would still more likely than not be happy to work with you.
The Loan Princess admin team know the lending departments at our panel of tenant loans companies very well – we know what type of borrowers they like to work with the most. When you fill in the application form on our website, we take the details you send us together with the details contained on your credit report and we then propose you and your application to the lenders most likely to be happy to work with you.
Within seconds, we’ll come back with the best offer we’ve found, setting out in easy-to-understand detail the amount of interest you’ll be charged on your tenant loan, how much you’ll have to repay each month, and everything else you need to know. Loan Princess is a broker, not a lender – our job is to find the best match for borrowers like you.
Our service is free and there’s no obligation to accept any loan we find for you. To start your application, please click here.