Fast tenant loans


A tenant loan is simply a loan that is made available to a tenant in the UK that does not have any property to offer as security. In laymans terms, it simply means that the lenders do not have any comeback or property to repossess if you do not keep up your loan repayments. The example below shows you why.

Example
Mr Jones lives in a rented apartment in London. He has a job but as he moves around a lot he has decided it is simply not worth buying a place of his own, so renting is a better option. He decides he needs a loan to pay off a few debts and leave him with enough to go on holiday with, so he applies to UK Bank PLC.
UK Bank PLC offer him a loan and although the interest rate is slightly higher than he wanted, he is delighted that he is getting his money on the bank’s special tenant loan scheme.
He continues paying the loan for a few months and then to his dismay, he finds out that he is to be made redundant. Apart from the obvious concerns he has, his main one is how is he going to pay his bills?

Time goes on and he still can’t find a job. Things are tough and he is struggling to pay his bills, let alone live day to day. The landlord is threatening to kick him out so he ensures that out of all of his bills, he always pays the landlord first. He also makes sure that he pays his utility bills and of course his mobile phone bill in case someone calls him about a job.
In fact, he can make all of them apart from his tenant loan and anyway, he has had his holiday now and paid all of his credit cards off with the loan so it’s not as if he is getting any benefit from paying this loan every month. He decides to stop paying his tenant loan.

UK Bank PLC hear about this and decide to take him to court over his refusal to pay his loan. The problem is that because this is a tenant loan, they cannot take his car off him in lieu of the debt. They can’t try and repossess his house either because he doesn’t own one. The best they can hope for is that the court make him pay up in full or threaten him with a conviction.

However the court decides that his situation is unfortunate and that he simply cannot repay the total debt in one go and of course, he has no assets to help (remember, the bank cannot touch the car or the house as it was not secured against the tenant loan). The court decide that he can repay the bank at a rate of £10 per month instead of the contractual payment of £180 per month, as £10 is all he can afford in his current situation.

The example above is why lenders and loan providers charge tenants a higher rate of interest and why it is more difficult to obtain a tenant loan.

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