Things to consider before taking a personal loan at old age

It is expected that lifelong hard work will result in a peaceful golden age. But, sometimes, life throws hard balls irrespective of a person’s age. Be it increment of medical or lifestyle expenses, unfulfilled bucket list or something else, coping with that emergency situation becomes mandatory no matter what.

If it is a financial crisis, it can be covered up by taking a personal loan. Although getting approval for a personal loan above the age of 60 is a bit difficult. The reason behind this is that there is no certainty of income during old age. The good news is the idea is changing now. Some financial institutions and banks have felt the importance of providing necessary financial support for the golden-agers. They have introduced personal loan for pensioners availed by those who earn a regular pension. Once you submit your pension documents to the financial institution to apply for a personal loan, you get approval. This way the pensioners get a loan up to 12 to 15 times their earned pension amount. The EMIs, in this case, is directly debited from their pension accounts for the purpose of repaying the loan. 

Now, let us see what things need consideration before you can take a personal loan at old age.

The source of income

A senior individual needs to have a source of regular income through pensions from the state, central or any government recognised body to be eligible for a personal loan. Also, getting payments from a previously employed private company or withdrawing money from a deceased relative’s account can make a senior citizen eligible for a personal loan. The interest rate for a personal loan is lesser compared to other unsecured loans, so it is a better choice than having a credit card debt.  

Interest rates

The interest rate is not fixed when it is a personal loan for pensioners. The interest rate is usually determined based on the applicant’s age, credit scores and the applicable policy schemes of the lender. When a personal loan is opted by a senior citizen, lenders make the interest amount preferential. The processing fee is also lower than usual. There are few lenders and financial institutions that do not charge any processing fee while issuing a personal loan for a senior citizen.  

Unsecured and secured finance 

If a person has a regular income like a pension, they do not require to pledge collaterals while applying for a personal loan. They can apply for the loan based on their earned pension. 

If they do not receive a pension and they do not have a regular income, some lenders arrange personal loans for them in exchange for collateral. In this case, the maximum amount of loan depends on the value of the pledge. 

Tenure repayment

The tenure repayment period differs from one financial institution to another. It is based on the respective guidelines and schemes. But mostly, it resembles the time period of a regular loan,  which is from 12 to 60 months. Credit history and sufficient equity also play a role in terms of determining the tenure period of repayment.  

Credibility of lender

It is important to consider a lender’s credibility before you can decide to take a personal loan at old age. It is crucial to find out as much as possible about the lender. It can be done by checking the testimonies and reviews of their previous customers.  

Minimal documentation, a fast and straight forward application process and relaxed eligibility criteria have made taking personal loans a convenient choice at old age. The benefits are incomparable. It is up to the loan applicant to finalise the tenure, security and principal. It could not get any easier than this. Consider all the points mentioned above and make your golden age stress free by taking a personal loan.