Renting your home, rather than owning it, comes with many advantages. But it also comes with a giant disadvantage. Because you have very little security to offer, it is often very difficult to get a loan.

To respond to this, many companies are now offering a new product called Tenant Loans. Designed purposefully for those who rent their house or flat from either their local council or a primary landlord, they offer an unsecured loan for people who would otherwise find it difficult to get credit.

Banks prefer to lend to people who own their home. This is because, if things go wrong and you can't afford to make your loan repayments, the bank or loan company can claw back its money by repossessing and selling your home. People who cannot offer security don't come with this guarantee, which means that an unsecured tenant loan is considerably more risk. Because of this, banks often charge a higher rate of interest for unsecured tenant loans than they do for secured loans.

Tenant loans are actually very similar in many respects to a normal, secured loan. The bank lend you a certain amount of money, and at regular intervals you make a repayment that covers not only the money you originally borrowed, but enough extra to cover the interest that will make the bank a profit.

Because of the lack of security, you can often not borrow as much, but most companies have a range of loans available, ranging from £1,000 to £5,000 or even £10,000. If you have an exceptional credit record, then they may be prepared to lend more, perhaps £25,000 or £50,000, but this is not the norm.

Most loans are repaid over a period of several years - three to five years is common, but the repayment period can be up to ten years, or can be as low as few months. It is important to remember, though, that the longer it takes you to repay your loan, the greater the total amount of interest you will have to repay. If it takes you a long time to repay your loan, the total cost to you will be much higher.

Small cash loans of up to £1,000 are also becoming a more lucrative market. Because the amount loaned is relatively low, security is rarely required, but interest rates can be higher, and often an administrative fee is charged, so that the bank can profitably offer these unsecured tenant loans.

If you have bad credit tenant loans aren't very easy to get, but they are not impossible to obtain. Obviously, for the bank, if you have bad credit, the risk of making loans for tenants with bad credit is much higher. This means that the interest rate for these loans is quite often even higher than for a regular tenant loan. As a guide, bad credit loans for tenants are usually priced at 10-30% higher than for those with good credit.

Finally, if you are considering taking out a loan, please, please make sure that you take specialist advice from a professional. Your local Citizens Advice Bureau will be very knowledgeable, and can give you lots of useful information. At all costs try to avoid loan sharks and unlicensed loan companies, who can charge exorbitant rates of interest. No reputable tenant loans company will have any problems with you taking advice before buying their loan.