Originally loans were created for people who could afford to repay monthly installments over a longer period of time. However, there is a large population that is not able to keep up with the requirements for these loans. For people who are in need for money on a short term the banks invented the tenant loan.

A tenant loan allows you to quite easily collect some money which you can pay in monthly installments. We have to make a difference between secured and unsecured loans. We speak of secured when the person is able to pay the monthly installments over a longer period of time, from a few months to a couple of years. However, when the bank or company does not believe that you are able to keep up with the installments, or if they think there is a certain risk, we than speak of unsecured loans.

If you are unsecured, having bad credit, you are still allowed for a tenant. However, because the risks are higher the banks will ask for a higher interest rate to cover from the risks. In this way they have a smaller chance of losing their money. The good thing about this is off course that more people can ask for a tenant and buy the things they want or need. The bad thing is that people with bad credit have a bigger chance of not being able to come up with the interest rate every month causing financial problems.

That is why you should always consider the risks up front and have a good view on your financial strength and weaknesses before you decide to go for a tenant.