A myth that needs to be debunked is that pensioners or retired people can not get a personal loan or any type of loan. The need for money can arrive at any point in time and at any age because situations do not only arrive if you are young. Some lenders recognised the problem through which retired people go through, banks offer loans which are specially customised for the retired people. Banks have various loans schemes to offer for pensioners which offer an array of benefits. For a retired person it might be difficult to approve the loan as they don’t have a regular source of income but it is not impossible. However, pensioners can easily get a personal loan when compared to a person who does not receive a pension. The monthly pension is treated as collateral if a person receives a pension. If a person does not receive a pension then also they can get a personal loan if they own a property, or golf which can be used as collateral. Lenders also require a guarantor, and in case a pensioner dies or due to any uncertain condition he is not able to repay the loan then the guarantor has to pay the remaining loan amount to the bank. There is also an option for instant personal loan which can turn out to be helpful.
Eligibility criteria for pensioners:-
Most of the lenders offer personal loans to senior citizens who are in a range of 60 years -72 years. Interestingly, senior citizens also get a lower interest rate when compared to others. Pensioners can get a loan 10-12 times of their pension amount and the loan has to be repaid within 1-5 years.
Here are the few ways which can improve the chance of getting a personal loan after retirement:-
Check eligibility criteria- A borrower must be aware that every lender has different eligibility criteria for sanctioning a loan but the banks have some additional criteria if a borrower is a senior citizen. Banks offer loans to the senior citizens who are receiving a pension from the government as it is treated as a steady source of income which would be used to repay the loan. However, when applying for a loan a person should not be more than 70 years and he/she must repay the loan before they turn 75 years.
Add a co-borrower- Adding a co-borrower who is a working professional can increase the chances of getting approval for a personal loan after retirement. This the risk of a senior citizen can be reduced, a lender can trust that EMI will be paid on time by the other applicant even if senior citizen gets sick or untimely demise happen. Banks do insist to add a co-applicant to avoid any defaults.
Borrow less- To avoid the rejection of a loan one must borrow a less amount. Less amount means that EMI will be low and the amount can be repaid within a lower loan tenor. In a way, the lower loan amount reduces the lender’s credit risk.
Maintain a good credit score- If a senior citizen has a good credit score which is in between 650-800 then senior citizen can easily avail the loan. It is a myth that banks do not check the credit score of senior citizens, most of the lenders easily approve the loan (if a borrower fulfils the other eligibility criteria as well) if a borrower has a credit score 750 and above. In case your credit score is low then you should take corrective measures to improve the score before applying for a loan.
Borrow from Public Sector Banks (PSBs)- A retired pensioner receiving pension should borrow money from the public sector banks if they need money to borrow. Public sector banks have various loan schemes for the pensioners and also offer the loans at a lower interest rate. For example:- SBI pensioner loan, Punjab National Bank pensioner loan, Central Bank of India, Bank of India and many more.
Conclusion: Many senior citizens get tensed when they are in need of money and they also do not go to buy a personal loan thinking that senior citizens cannot get a personal loan, which is not true. Many lenders offer various loan schemes only for pensioners, usually, they offer to loan to the senior citizens who receive the pension from the government. There could be chances that loan application gets rejected so as to improve the chances one should try to borrow from PSBs, increase the credit score.