Applying for a Loan When You Retire
Retirement can be pretty tough if you did not save enough when you could. You will need a lot of money even after you retire. You may need money to buy someone a gift or meet a sudden medical emergency. All this requires money, which may not always be available.
A large number of people do not work after they retire. Their only source of income is the pension that they receive or their retirement fund. However, such money often comes with conditions. This is why opting for a loan may be your only option to get money.
You’ll need money even if you have a nice house and a cool car. Plus, some seniors apply for a loan in order to maximize tax savings. It’s also not uncommon for retirees to apply for a loan in order to refinance their loans, especially mortgages.
Sometimes they wish to move to a bigger or smaller house, and sometimes they want to invest in a new property. If you think you can’t apply for a loan once you retire then you’re wrong. Yes, most loans require a regular stream of money for you to qualify. But, there are some loans that may be available to you even if you do not have a full-time job.
Bill Baker business loans expert, says “getting a loan as a pensioner can be difficult. Particularly because usually the main source of income comes from the government. Banks and private lending businesses will be wary giving a retiree a loan. It is worthwhile getting in touch with your local social services department to find out if the government provides retirement lending opportunities. In Australia we have a pension loans scheme, this is a type of reverse equity mortgage that offers older Australians an income stream to supplement their retirement income”.
The method to apply for a loan is same, no matter what age group you are in. However, retirees may have to submit additional documents in order to prove their financial condition. However, this largely depends on why you’re applying for a loan, and from where.
Most online lending firms are not very stringent and some may not even require a collateral. However, banks and other such organizations can be quite difficult to impress, especially if you have no job or assets in your name.
Let’s have a look at what else you need to know if you’re applying for a loan in retirement:
Choose the Right Loan
Seniors can apply for a variety of loan. In fact, many organizations offer loans that are specifically designed for retirees or seniors. You should consider all your options and choose a loan that suits your needs the best.
The most important thing is the affordability factor. Pick a loan that’s easy to pay back. Some factors that you should pay attention to include the interest rate and payment terms.
Choose the Right Organization
This is as important as choosing a loan. Different organizations have different terms and conditions. You should ideally pick an organization that’s friendly and willing to answer all your questions.
Keep your Documents Handy
You will need to prove you can pay back the loan. Some organizations may only consider your credit score when deciding if your loan application should be approved or not. However, some may require a collateral, which can be an asset under your name that has to be higher in value than the amount of loan you’ve requested.
Credit-Retire: Living a Debt Free Life
It’s possible to have no credit score. Once you retire and pay off all your debt, you cease to have a credit score. While it’s a good thing, it can impact your ability to apply for a loan in the future.
You may be credit-retired if you have no debt in your name and no financial transaction. In such a situation, you will find it difficult to get a loan. Plus, your credit card may also have a reduced limit, if you apply for a new one.
According to Beverly Blair Harzog “Some retired folks are doing well financially and even traveling. But others are struggling to make ends meet while living on a fixed income. Many even have credit card debt due to high medical bills.”
The easiest way to avoid this is to continue to use your credit card. If you’re scared of debt, you may only make small payments using the card so that you remain active.
ContributorDallas Dorrall is passionate about music and is living her dream managing and promoting Nashville/Muscle Shoals based Country Music Artist, Johnny Collier, currently touring the US. While traveling, she enjoys reviewing new artists, restaurants and nightclubs. Dallas is crazy about her family and friends and attributes her enthusiasm for life to a quote by Marianne Williamson (which she still reads every day) entitled “Our Deepest Fear”.