With high levels of unemployment due to the recession, many tenants have found accessing loans increasingly difficult. Most tenant lenders use credit scoring to asses an application. A credit score is made up of a number of factors including time at job. Tenant lenders prefer to lend to applicants who have had the same job for a number of years. Due to the economy many tenants have been made redundant, affecting their chances of finding a tenant loan. All responsible lenders will also check that the applicant can afford the loan, as such due to the economic climate a number of potential tenant applicants have had their hours cut or income reduced, again making it harder for perspective applicants to access tenant lenders.
There are however still a number of tenant loan products available to the unemployed and to tenants who receive low incomes. Firstly there is what is commonly known as doorstep loans. Doorstep lenders have been trading for decades and typically advance a small cash loan to new customers, looking to top up the loan at a later date once the applicant has proved they are a regular payer. Doorstep lenders get their name as they collect their money back on a weekly payment from the applicant's doorstep.
Then there is a new product to the personal finance market called a guarantor loan. Guarantor loan lenders can lend up to several thousands of pounds, and base their lending decision primarily on the strength of the guarantor, who needs to be a homeowner. Again as with Doorstep loans, Guarantor lenders look to top up existing loans after twelve months of consecutive payments. Guarantor lenders offer terms up to five years and take a monthly payment via direct debit or standing order.
Loans for tenants who are currently unemployed or receive a low income tend to come with a higher rate of APR as the lender is taking a greater risk. Both doorstep and guarantor loans are available directly from lenders or can be sourced through a number of brokers. As such all potential tenants looking for a loan should shop around and make sure they find the best deal.
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