With the current economic crisis playing a major role in a lot of personal financial disasters, which is likely contributing to a sputtering recovery, lenders have recently started to offer better deals on loans. Recent financial news revealed that the trend of using credit to pay rent and mortgage payments increased dramatically in 2009.
Those desperate households that found that they were left with no choice but to use credit cards to pay their rent or house payment may be relieved at the latest news that more banks are offering collateral free tenant loans for the unemployed. These tenant loans for the unemployed provide immediate relief for those who need to make their rent payments, and most lenders that are offering these loans are not requiring that the applicant have collateral.
This has to be welcome news for the one million households that used their credit cards to pay their rent over the past 12 months.
The housing charity group, Shelter says that this new information is shocking and paints a very grim picture for the future for the many people who found themselves in such a tight situation that it was necessary to use credit. They estimated that approximately 1 out of 12 people living in London used their credit cards for this purpose over the past year; there is no doubt that this will greatly increase the debt burden on a number of households in the near future.
There are a variety of the terms that are being offered for these collateral free loans. Some lenders have released information about their personal loans for the unemployed that details some of the loan terms. They are offering loans that range from £1000 to £25000 with a repayment term of 1 to 10 years.
Although these loans are flexible, and borrowers can possibly arrange terms that are flexible enough to fit their financial situation, one message that these lenders are sending out to borrowers is that it is extremely important to keep up on your payments, as these loans do come with stiff penalties for late payments.
These collateral free loans are targeted toward those people who have incurred debt in order to make their rent or mortgage payments, but they can be used to pay other types of debt, or help with living expenses.
Those that are already in debt will want to carefully consider their options before opting to get loans to payoff debt. The benefit of getting a loan to pay credit cards is that the borrower will usually have a longer time to pay the debt, and the interest rate will often be lower.
Another option to consider are the consolidation loans being offered by a number of lenders at a lower interest rate. These consolidation or home equity loans can help pay down credit card bills, without the expensive interest rates charged by most credit card companies.
Borrowing money to pay debt is not a good idea if it can be avoided, but if there is no other alternative, it is best to pay the lower interest rate.