Are there loans for retirees?
Life could be so simple: Finally, work no longer calls every day and there would be enough time to discover the world and pursue your beloved hobbies. But often enough there is a lack of financial means to fulfill a long-awaited wish. Unfortunately, many banks here are not exactly cooperative and refuse to give pensioners a loan. They have the problem that they have many wishes but are not financed.
Loans for pensioners are completely excluded from many banks, which is justified by the higher risk of death. Every bank wants to get back the money they have lent and sees the risk that older people will no longer be able to make the repayment.
On the other hand, the demographic development of society is quite clear. People are getting older! In theory, you would also have more time to repay loans. Some banks are already rethinking this, others may take some time.
Are you a pensioner and want a loan? We check every single case!
Why are pensioners less likely to get a loan?
People are getting older – the time factor no longer plays a role in repaying a loan. However, statutory pensions are getting lower, which in turn means that less money is available for repayment each month.
Banks also justify their refusal to grant loans to pensioners because older people are at greater risk of illness and death. This could lead to personal bankruptcy if the borrower becomes ill or even in need of care. Every bank will be careful here, because they want their loaned funds to be repaid.
A residual debt insurance could help because it covers the risk of default in the event of death or illness. Loans for pensioners are still refused by many banks. Others in turn demand significantly higher interest rates or set the monthly installments so high that the loan term can be kept very short. Generally, retirees get worse terms if they get a loan at all.
Here are the most common reasons for refusing a loan for pensioners:
- higher risk of death and illness
- possible personal bankruptcy due to excessive costs
- Insufficient pension payments
- no guarantors available
At the same time, once again an overview of the consequences that can arise when granting credit – of course all negative for the pensioner:
- worse conditions, especially with regard to the interest rate
- short terms for the loan
- expensive installments for residual debt insurance
- Granting only small amounts of credit
How is the loan approved?
A positive Credit Bureau information is always helpful for lending. If you are not sure as a loan applicant here, you should request information in advance and have any incorrect entries deleted or changed. Banks are more satisfied with a “clean” Credit Bureau and are more responsive to the requests of the applicants.
Regular pension income should also be available. It does not matter whether they come from statutory or private pension insurance. At least 1,000 USD should flow into the account per month. Important: Every pensioner can increase his chances of getting a loan here if he ensures that after deducting all costs there is still enough money left for the loan installments.
In addition, a pensioner should be able to offer additional collateral. These can be taught in the form of real estate or by guarantors.
At this point, an overview of some options that can have a positive impact on lending:
- positive Credit Bureau information
- regular income from statutory or private pension insurance
- possibly further income
- collateral
- guarantee
- Credit default insurance
If the loan is applied for, various documents must be submitted. These include, for example, the pension notification and other documents that can serve as proof of income. In addition, there can already be a declaration by a guarantor who would be liable for the loan. In addition, the willingness to take out credit default or residual debt insurance can be signaled.
Which banks are eligible?
First of all, the house bank is certainly the number one contact point when it comes to applying for a loan. However, as in many other cases, this is not necessarily the best contact because the conditions are often less good. It is therefore worthwhile to use offers from other banks. An online bank, for example, can offer significantly better conditions.
At this point, we would like to point out the possibility of a personal loan, which can be granted, for example, by various internet banks. The loan project and the person of the potential borrower can be presented here. In the best case, there are then several investors who jointly provide the loan.
A loan may also be available to friends, which in turn has the advantage that only low interest is often payable – if at all. On the other hand, acquaintances and relatives are cautious when an older person requests a high loan.
Are you a pensioner and want a loan? We check every single case!
What needs to be considered when applying for a loan?
The loan application must of course be completed in full. First of all, this includes personal and address data. Information on statutory or private pension insurance is also requested, along with the relevant evidence.
Since the banks also want to know which monthly charges the borrower has to bear, proof of rent payments, additional costs and other expenses, such as for insurance, must be provided.
If other loans are serviced, they must also be listed. They should be mentioned in the amount of the monthly charge and should not burden the existing capital too much.
Is there any income? Then they must also be mentioned, because they increase the credit rating. Real estate can also be mentioned here – these offer a certain level of security if they are owned by the loan applicant as residential property.
Of course, it is also important: Does the loan have to be taken out at all? Or is it enough to save a few months and then fulfill your wish? For example, when it comes to traveling, retirees are significantly more flexible. You are no longer tied to company vacation times and can therefore simply travel a few weeks later. However, other requests often have less time and must be fulfilled directly. Even a pensioner cannot avoid taking out a loan here.
Here are some tips on how the creditworthiness of pensioners can be positively influenced:
- Choose short terms of up to three years.
- Agree on low loan amounts.
- Positive Credit Bureau entry and regular repayment of further loans.
- Taking out residual debt insurance.
- Application with two borrowers – ideally together with the spouse.
- The regular income clearly exceeds the expenditure.
Many banks rely on collateral and would like the property to be transferred as security. Such a loan comes into question if, for example, a new car is to be bought. The so-called non-cash reference is important here. If real estate is available, it can also be used as security. It also makes sense to leave the amount of a mortgage that is entered in the land register there. This has the advantage that there is security about the property again when the loan is granted again. However, the prerequisite is that the new loan is then taken out from the bank in whose favor the mortgage exists.
Otherwise, pensioners only need to ask a bank for a loan and not be afraid of the risk of using an online bank or its offer. These banks in particular often offer the best conditions because they do good business themselves. They are often much more accommodating to pensioners than many branch banks.