The Complete Guide On Loans For Pensioners In The Uk

Securing a loan as a pensioner in the UK can be intimidating. This is the time when you receive a fixed small remuneration every month, which might not suffice for unexpected expenses. Therefore, you must know what loan options are available to you.

There are various myths about pensioners’ capacity to borrow money to pay for small unexpected expenses. The following misconceptions should be debunked:

• Pensioners cannot borrow money as it is not income from regular employment.
• Pension is dismissed as many lenders do not consider it income.

The fact is that:

• There are certain loan products available exclusively to borrowers.
• Pension is regarded as income too. Approval is reliant on affordability.

Why do pensioners borrow money?

Pension is not like a regular wage, and therefore it cannot be sufficient to pay for unexpected expenses. pensioners usually seek money in the following circumstances:

• It is likely that your roof, your ceiling, or your attic needs an immediate repair. Refurbishments to improve home accessibility could be expensive, for which you may need a loan.
• Despite health insurance, full healthcare support is not available. It could be challenging to pay for a treatment outright.
• You might need money to generate a supplemental income source. Additionally, pension loans could help you pay for travelling and other similar expenses.

Loan products available for pensioners

Some lenders could approbate your application though you are on a pension. Research those lenders and compare rates so you do not end up with an expensive deal.

1.  Personal loans

They are also known as unsecured loans as they are not backed by collateral. This is one of the reasons why these loans charge high interest rates.

• These loans are approved based on your creditworthiness.
• There is no risk of losing your asset in case of default.
• They help build your credit score if they are settled on time.
• You can borrow up to £25,000 depending on your borrowing capacity and affordability.
• The repayment term of these loans lasts for up to five years.

Since you are a pensioner, lenders will try to restrict the loan amount. Most of the time, they will not let you borrow a larger sum of money.

2.  Equity loans

If you need a large amount of money, equity loans could be the best bet for you. It means borrowing against equity you have built in your home that you pay down over a couple of months or years, depending on the size of the loan. Fixed monthly payments ensure on-time payments.

3.  Guarantor loans

Sometimes, lenders are sceptical about your repayment potential due to your poor credit rating, but by arranging a guarantor, you can ameliorate your chances of being accepted.

• The guarantor you choose must have a strong credit score.
• They should also demonstrate creditworthiness.
• Upon payment failure, they will be called on to discharge the debt. This could result in their damaged credit score.

Guarantor loans should be considered when you have full assurance of payment obligations.

4.  Secured loans

If you own a house, you can secure it against your loan. Secured loans help you borrow a large amount of money. Since they are subject to collateral, they come with lower interest rates.

• You will lose your property if you abdicate your responsibility.
• They are ideal when you need money for major expenses such as home improvement or medical treatment.
• They are cheaper than unsecured loans.

Your credit score should be excellent to be able to qualify for lower interest rates.

5.  Pensioner loans

Some lenders provide small loans to pensioners. They are aimed at funding small emergencies. You can easily be signed off on if you substantiate your ability to repay.

What to do before you decide on pension loans?

Before applying for pension loans, you should consider these steps:

• You should review your budget. There is a huge risk of falling into debt as you are on a pension. Be realistic about your needs.
• Go through your credit report, as a decent credit file is a must to be accepted by lenders. One reason why it is recommended is that there could be some erroneous information.
• Compare interest rates, fees and other charges before grabbing any offer.
• Assess whether you actually need money. If you can make do without it, you should not borrow. Understand all types of loans available to you and their associated risks. The impact could be far-reaching, and thus caution is enjoined.

What are the upsides and downsides of these loans?

 Here are the advantages and drawbacks of quick and easy loans for pensioners:

Pros	Cons
You can access funds instantly if you have a strong repayment capacity.	These loans usually come with a shorter repayment length, which can make repayments quite challenging.
The repayment term will be tailored to your current financial position.	If you are too old, you might be refused a large loan
You can live your retirement life better.	There is a risk of falling into debt.
Several loan options are available to you, such as personal loans and credit cards.	Securing them against your home could increase the risk of losing your property.

What are other alternatives to pension loans?

Chances are you fail to secure a loan for a pensioner. Consider other alternatives:

1.  Credit cards

For smaller expenses, you can use your credit card on the condition that you will pay off the balance on time. Apply for a 0% card if your credit history has been impressive.

2.  Budgeting loans

The government provides budgeting loans, which are interest-free, to pensioners and others who are on benefits if they need money for one-off purchases.

3.  Downsizing

Moving to a smaller house can release equity that you can utilise to pay for emergencies or urgent expenses.

The final word

If you are looking for a pension loan, try to apply for it from a reputable direct lender such as QuickLoansLender. You will receive approval based on your affordability.

FAQs

1.  Can you get a loan when you are over 70?

Most of the lenders refuse loan applications from people who are over 70. However, some might be willing to approve the loan for a paltry sum.

2.  Is borrowing money during retirement safe?

If you need a small amount of money for an unavoidable reason, provided you are confident in your ability to repay, using a pension loan is not a bad idea. However, caution is recommended if you have to borrow a large amount of money.

3.  Can you apply for a loan with a pension despite a bad credit rating?

Most lenders will accept your applications if your credit score is decent. Some might approve despite subprime credit, but it will be subject to high interest rates.

4.  What other income can you show apart from a pension?

In addition to a pension, you can show income from rent, dividends, interest income, a part-time job, etc. Supplemental income will improve your chances of getting qualified for a loan.

5. Do pension loans come with fees?

You will have to pay processing fees, but some lenders charge hidden fees, too. Inquire about that before signing a loan agreement.