Life after retirement is many times just the opposite of what we imagine during the working years. There is no end to the expenses and emergencies that can drain you financially. With no regular income at disposal, the population is never the preferred borrowers for the bank.
Taking a loan after retirement is tough because of the overstressed eligibility of the financial institutions. You may find private lenders more helpful in terms of offering financial support to the retired people. Still, there are certain measures you can take to improve the chances of approval at favourable terms.
In this blog, we have mentioned some tips to increase the chances of loan approval after retirement.
Check the Eligibility Before Applying
Every hard enquiry on credit history is a negative mark that shows your desperation for funds. You should never apply for a loan without first checking its eligibility. Lenders have a different set of eligibility for senior citizens than regular borrowers.
A regular form of income or pension is recommended to get the approval of the lenders. Someone will rarely offer a loan to people who are in their 70s. A 70-year-old borrower will get a maximum of 5 years tenure even on a house mortgage.
Get a Co-Signor
A guarantor or co-signor for the loan will exponentially increase your chance of loan approval at any age. They are responsible for the repayment if you somehow default the loan. Therefore, the risk is shared by both, the guarantor and the borrower for the loan amount.
There are certain eligibility criteria for a person to become a guarantor. They must have a good credit history with no major defaults. Also, a regular income to afford the loan instalment is required for the guarantor.
Lower the Loan Amount
You might have to recalculate the required money to increase the chances of approval. The lenders can offer you an amount below your expectations based on your repaying ability. Sign the loan agreement if you find it reasonable for the purpose.
If the amount is not sufficient, you can continue your search for the loan. Many private lenders offer bad credit loans with an instant decision in Ireland. You may have to spend more time looking around for the lenders than the approval process.
Apply for Secured Loans
The eligibility is relaxed for the loans where the collateral is provided by the borrower. The loan is less of a financial risk for the lenders when compared to the unsecured loans. You can also expect lower interest rates and the overall cost of the loan.
However, there is a serious risk of losing an asset worth more than the loan amount. You might have to use the house or car you earned after years of hard work. Some lenders will take mutual fund and other securities as collateral to offer short term loans.
Maintain the Credit History
The defaults in your credit history will diminish the chances of approval in the absence of a regular income. It is recommended to have no other defaults than one or two missed payments in the recent credit history. Lenders must consider you as a responsible borrower to approve a loan post-retirement.
You may not need a guarantor or collateral with a perfect credit history. The terms will be more favourable with low-interest rates and APR. Check the credit history for any discrepancies before applying for a loan.
Chose Private Lenders
Private lenders offer a practical solution to borrowers with relaxed eligibility and flexible terms. You have a better chance of approval while dealing with the lender directly. They might even offer you a great deal based on your repaying ability, not the credit history.
Your pension or returns from the investments will be considered as income by the private lenders. There are certain benefits as well, that includes repayment holidays and term extension. A little search on the internet will give you a good list of lenders in your region.
To Conclude
To sum up, a loan is not easy to get after retirement with only the pension to rely on. You can use the abovementioned ways to get financial support from the lenders with some favourable offers. However, there is no guarantee that the interest rates offered will be similar to the other applicants.