Unsecured loan: a blessing in disguise for tenants
by Nidhi Sachdeva
In the recent past, Britain has seen a steep rise in its mobile
workforce. This has prompted a sharp increase in the number of
people hunting for a rented accommodation. Besides work, a
number of other reasons like unavailability of council homes,
divorce etc. may be attributed to the increase in the number of
tenants in the UK. If you are a tenant it is very obvious that
you will not be able to offer a home as collateral for a loan.
In other words, you automatically become ineligible for a
secured loan unless you forward something else like stocks, car
or jewellery as security and your lender accepts them too.
In a situation where your lender is not so understanding and you
need to borrow money urgently, what do you do? To cater to the
financial needs of tenants a different category of loans by the
name of unsecured loans was propounded.
Unsecured
loans are a form of credit that is especially meant for
people who cannot offer collateral. Since, there is no security
provided to the lender, his risk increases several times. To
offset his risk therefore, the lender levies a high rate of
interest.
But unsecured loans also come with several advantages.
Firstly, absence of collateral eliminates the need for
valuation, thus saving you the cost of valuation, arrangement,
solicitor's and conveyance fees. What's more you save time also
and paperwork becomes a lot less hassle prone. Consequently, an
unsecured loan has a swifter approval process.
Your credit score plays a very vital role in the process of
getting your unsecured loan approved. A bad credit score
increases your chances of facing a loan refusal, whereas a
splendid credit history may be rewarded with a low rate of
interest. Basically the point is that your lender needs to be
convinced about your repayment ability. Once that is done, the
rest may just be a cakewalk.
However, if you are refused a loan on account of your poor
credit score, don't lose hope. There are a lot of lenders that
lend money to poor credit holders and that too at easy terms.
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