5 Things Pensioners Applying for a Loan Should Remember

Are you a pensioner applying for a loan? Here are 5 things you should remember

As a pensioner, applying for loans and finance can be problematic. Some of the best deals in the market may be unavailable to you because you do not meet the ideal criteria that lenders look for. For example, because of your situation you may no longer be able to generate income. To make up for this, you need to make sure that other aspects of your loan application are presented strongly to allow you to obtain the loan most suited to you.

Your age may make you a credit risk

In general, the main thing that lenders consider when reviewing a credit application is risk. Your credit history, income and age may all point to you being a high credit risk and lenders may consequently decline your application. Because of these factors, senior citizens and pensioners may experience greater difficulty in obtaining a loan. However, if you can show that you are able to service your loan for the duration of the term, or even prepay the interest, you still have a good chance of succeeding in your application.

You need to demonstrate loan serviceability in your application

Regardless of your age and employment status, the main thing you need to show is that you can actually pay back the loan you wish to take out. If the lender decides that you will have no difficulty making the scheduled repayments for the term of the loan, you will probably be successful in your application. Any information you can provide regarding your assets and income will obviously be relevant.

Being an existing homeowner may help your situation

Even if you have strong income as a pensioner, a number of factors such as illness or hospitalisation may affect that income and lead to financial difficulty. If you are a homeowner, you may be able to access any funds or equity in your property to secure the loan and convince the lender that you can meet the proposed repayments for the term of the loan.

Non-standard loan facilities may be difficult to obtain

Line of credit mortgages, some long-term fixed-rate mortgages and mortgages that offer payment breaks are all innovations that have appeared in the mortgage market in recent years. Unfortunately, many of these mortgages may be unavailable to pensioners. Lines of credit, for example, which allow the homeowner to take equity out of his or her home, present greater risk to a money lender because of their potential to extend the loan period and create more opportunity for default. Because pensioners may already be considered high risk, it is unlikely that these financial products will be available.

You may be required to apply for loan insurance

Depending on your circumstances, you may wish to obtain loan insurance. This ensures that your loan repayments are met in the event of involuntary unemployment, injury or death. Although the premium may be higher than average due to your status as a pensioner, a lender may nevertheless require you to obtain loan insurance before approving your application.

Nick Cameron is a writer for Australian Debt Reduction which is part of Australia's largest Debt Relief organisation and has assisted more than 10,000 Australian's reduce their debt. You can read more articles and find out more about how to reduce your own debt at http://www.australian-debt-reduction.com.au or by calling 1300 306 272 from within Australia.

Politico (blog)

U.S. loan on hold, Fisker electric-car plant stalls San Francisco Chronicle Fisker Automotive, a recipient of US loans to develop electric cars, said it has temporarily stopped work on developing a plant in Wilmington, Del., after the Energy Department froze access to its credit line. Fisker, which fell behind schedule on ... Fisker Stops Work on Delaware Car Factory After USBusinessWeek Clean energy loan recipient lays off staffPolitico (blog) Electric car maker and US loan recipient Fisker cuts jobsCNN Torque News all 142 news articles »

Auto Loans in 30 Seconds Drive Accelerating Vehicle Sales: Cars BusinessWeek Capital One boosted new-vehicle loan originations by 35 percent in the third quarter and 75 percent in each of the first two quarters of 2011 from the year-earlier periods, according to data provider Experian Automotive. That put Capital One ahead of ... and more »

The Sun Daily

China Credit Cards, Danish Loans, Smith & Nephews: Compliance BusinessWeek Denmark's financial regulator is proposing banks follow stricter rules on how they report bad loans in their accounts. “The central part of the proposal is that loans to troubled property clients in the future need to be reduced to match the value of ... China Credit Cards, Danish Bad Loans Accounts, Smith & Nephews: ComplianceBloomberg all 147 news articles »

CNN

Some Europe Banks Shun ECB Loans Wall Street Journal The ECB in late December doled out a total of €489 billion ($644 billion) in three-year loans at a 1% interest rate to 523 banks. The primary goal was to avert problems at banks that faced waves of maturing debt but didn't have access to borrow money ... MONEY MARKETS-Money markets position for 'wait-and-see' ECBReuters Money markets position for 'wait-and-see' ECBBusiness Recorder (blog) European Banks' Dollar Funding Costs Hold Near Six-Month LowBusinessWeek all 90 news articles »

Business Insider

Locals applaud student loan changes UI The Daily Iowan Sallie Mae — the nation's largest distributor of private student loans — changed its fee policy Feb. 2 in response to a Change.org petition that received 77000 signatures. Forbearance occurs when a borrower cannot make a payment and the lender agrees ... Graduate takes on debt problemLSU The Reveille Sallie Mae Agrees To Stop Pocketing Forbearance "Good Faith Deposit ...The Consumerist From where I standSouthside Pride Pekin Daily Times -The News Journal -TIME all 14 news articles »

Mo. senator calls for changes to payday loan laws CBS News Missourians who take out payday loans could get more time to pay them off, under legislation put forth by a state senator. Payday loans are unsecured loans of $500 or less. Current law says that that they must be paid off in 31 days. Sen. Senator calls for changes to payday loan lawsSoutheast Missourian all 13 news articles »

Minnesota Daily

Obama looks to up student loans Minnesota Daily Last week, the president proposed an increase in campus-based funds like Supplemental Educational Opportunity Grants, Perkins Loans and the Work-Study program by $10 billion annually. The Perkins Loan budget would increase from $1 billion to $8 billion ... As Cost of College Soars, Students Consider OptionsLoanSafe Students reconsider pricey tuitionToledo Blade all 61 news articles »

Credit Builder Loans Can Help Burnish Your Credit Score New York Times (blog) But I recently stumbled upon another credit-building product, conveniently known as a credit builder loan, that helps consumers establish credit or improve their scores. “Credit builder loans are offered as a way for credit union members to do a couple ... and more »

Committee supports Aerospace Training Student Loan Program extension Kent Reporter By MAIDA SULJEVIC For students enrolled in aerospace-industry courses at Renton Technical College, a bill proposed in the Legislature to extend the Aerospace Training Student Loan Program (ALP), if passed, could alleviate some of the stress of paying ... and more »

Business loan program advances in Legislature Daily Republic PIERRE — State government would open a new financing program that would help South Dakota businesses needing loans for working capital, under a measure passed Monday by the state Senate. PIERRE — State government would open a new financing program ... and more »