Tips for Getting a Personal Loan When You Are Retired

Living on a fixed income is not always easy. Unfortunately, retirees often encounter unexpected situations that they do not have enough money in their savings account to cover. It might be something simple like an appliance breaking, or it could be a medical emergency. While older people tend to have good credit scores, they also have a limited monthly income, which may worry lenders. If you need to apply for a personal loan, here are some tips to increase your chances of being approved.

Figure Out What You Can Afford

If you do not already have one, create a budget that shows your income and your expenses. For one thing, it will help you figure out how much of a loan payment you can afford. Secondly, it will also give you something to present to the lender that shows that you will be able to repay the loan. Even if you find out you can afford to borrow more money than you thought, only borrow as much as you need. Do not go any further into debt than you have to.

 Try Alternative Lenders

Going into a traditional bank may not be your best option. Online loan referral websites allow you to fill out one application and then they match you up with potential lenders. You can easily evaluate the different offers to find the one that best suits your needs. Make sure that you get a fixed interest rate loan no matter which lender’s offer you accept. The last thing you want is for your loan payments to go up unexpectedly.

 Check Your Credit Report

Because they often do have good credit, senior citizens present a very attractive target for identity thieves. Pull your credit reports from Trans Union, Experian and Equifax and make sure there are no accounts on there that do not belong to you. Sometimes accounts between family members, such as fathers and sons with the same name, can get mixed up as well. Examine all three reports and dispute any errors if you find them.

 Secure Your Loan

Another way to help alleviate lenders’ concerns about your income is to use assets to secure your loan. Many people use their home as collateral. If you have a 401k plan or a ROTH IRA that you do not want to tap into, you may still be able to use that as collateral for your personal loan. Cars, watercraft, and even some investments are all things you may be able to use to secure your loan. Secured personal loans often come with better interest rates as well.

Getting a personal loan is difficult for most people, but it can be even more difficult to do after you are retired. However, do not let lenders intimidate you or try to talk you into loans that do not make good financial sense. If you have all your paperwork together and you carefully research your options, you will eventually be able to find a lender who will offer you a loan with reasonable terms.

Editor’s View: I agree that it is likely difficult to obtain such a loan for those who are retired, simply because income streams are usually not such to where a lender would consider you a good risk.  If you are not too far along into retirement and finding yourself in this situation, you may well want to re-consider whether you’re truly ready for retirement.  Obtaining loans will get increasingly difficult, and will have more ramifications on your overall retirement strategy the further into your retirement you get.

About the Author: Dona Collins is a personal finance specialist and writer with a passion for helping other succeed financially.

6 thoughts on “Tips for Getting a Personal Loan When You Are Retired”

  1. Reverse mortgages are becoming more common for seniors for many of the reasons noted above. Many seniors have equity in their home but not enough cash flow to meet living expenses. They can meet living expenses while remaining in the home.

    A personal loan under these circumstances might lead to further trouble, and force them to sell their house during the life stage when stability is most needed.

  2. I recognize that it is more difficult to borrow when you are retired so I have a line of credit which I can access. A little planning goes a long way.

  3. I strongly agree with the editor.

    Retirement is not a time to take on debt. I would assume that a loan at this time would be because of some natural disaster or major medical incident.

    A retiree should be able to save from their income to pay cash for new cars or major home maintenance like a roof or furnace.

    I may never get there.

  4. I agree with the point that needing a personal loan after retirement may be a sign that you are not ready. Many retirees have the opportunity to make an average of $900 a month without having their Social Security income diminished. I disagree with the comment about reverse mortgages. Many are capped in the neighborhood of 50 percent of the value of a home, therefore, in essence, you sell your home for about half of its worth. Despite the benefits offered, that is not the kind of trade off that I would want to make.

  5. These are all so great tips. I am still far from retiring but I am really preparing for this time to come. As early as now, I am already planning what I will do when I retire.

  6. Great article! These tips can actually help out many people who are looking for a loan evn if they are not retired. If your readers still need some fast cash to pay off their bills and start over, they can get a secure car title loan which we’ll be happy to provide. They take out a loan based on the value of their vehicle and a lien is placed on it. They pay back the loan with low interest rates, and once their loan is all paid off we remove the lien. The best part of this solution is they don’t lose their car during the payback period.

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