Retirement is a time when you want to enjoy life, travel, do your favourite things and not worry about financial difficulties. However, the reality is that the income of pensioners often decreases, while expenses remain the same or even increase. In such situations, a consumer loan can be a solution to many problems, allowing you to cover necessary expenses, modernise your home, buy a car or simply improve your quality of life.
Not all banks are willing to lend to older borrowers, and interest rates in traditional financial institutions can be high. Therefore, retirees should consider alternative financing options. Let's break it down in detail, consider all the nuances and understand what types of loans are available for pensioners, what to pay attention to when applying for them and what financial organisations offer the most favourable conditions.
Why do pensioners need a loan?
After a busy working life comes the time of retirement. For many people, this period is associated with a decrease in income, since the old-age pension is usually 75% of the last salary. Pensioners enrolled in the general social security system and who have worked all qualifying periods receive an average of €1300, which is less than half of the average salary (€2800).
For full-career pensioners, the average old-age pension exceeds €1700 per month. Declining income makes borrowing a necessity, because older people continue to lead an active lifestyle, want to travel, improve living conditions, help children and grandchildren. We can conclude that retirement has two key consequences: more free time and less income! A loan can be a great solution to fund projects, improve comfort, and just to maintain a familiar lifestyle.
Traditional banks: Why isn't this the best choice?
Retirees appreciate direct contact with a counsellor in a face-to-face meeting to discuss their project, application and agree on the terms of the loan (amount, rate, etc.). A bank branch or traditional high street financial organisations seem to be the main places where older people can obtain a consumer loan. However, despite the convenience of personal contact, the terms of such loans are not always favourable due to high interest rates and strict requirements for borrowers.
However, there is a price to pay for this classic relationship between the borrower and the financial institution: the high margins of these institutions with their high profit margins. With branches in every city, luxurious head offices, expensive managers and shareholders, traditional banks have a business model that centres on profitability rather than customer needs. In addition, banks impose strict age limits and require credit insurance, which increases the cost of the loan. Because of this, non-bank loans are becoming increasingly popular among seniors.
Alternative credit solutions for senior citizens are
Collaborative consumption, collective financing, crowdfunding, online platforms: while these concepts may appeal more to the younger generation, their benefits are available to all age groups. Consumer loans without a bank can be obtained through specialised financial institutions that offer the most attractive rates with minimal transaction costs and an exclusive financing method. So how does it work?
It's very simple! The loan amount is generated from the savings of professional investor-lenders (individuals, insurers, funds, etc.). This is one of the most suitable financial solutions, especially for elderly people whose income is declining. Advantages of loans without big banks:
- Fixed rate: Retirees can plan their expenses without the risk of unexpected payment increases;
- Easy application procedure: Completely online, without a visit to the bank;
- Flexible terms: You can choose the amount and repayment period;
- No hidden fees: Payments are fixed and transparent.
Credit question: How to apply for a loan without a bank?
Getting a loan without a bank is fast, convenient and safe. The application takes only a few minutes, and the final decision can be received within 24 hours. The main advantage of such loans is their versatility. The money received can be used at your discretion: to buy a car, repair, travel or help your family. Here is the list of documents you may need: A photocopy of your identity document (passport or driving licence);
- A bank statement of bank details (RIB);
- A recent pension statement;
- Proof of address (utility receipt, gas or electricity bill).
Credit Insurance
Pensioners, like other borrowers, can rarely avoid credit insurance. Credit insurance is often compulsory and can include:
- Death and disability insurance (PTIA);
- Temporary Total Disability Insurance (ITT);
- Life insurance as an alternative to collateral.
It's worth saying that the cost of loan insurance can significantly increase the amount of your monthly payments. Fortunately, these costs can be reduced by delegating insurance at loan origination. Borrowers have the right to choose their insurer, change their insurance during the first year of subscription, and then terminate the contract and take out a new one every year thereafter. Insurance can be waived if the pensioner has personal guarantees (e.g. real estate, insured deposit or other source of stable income).
Conclusion: Money for a comfortable retirement
Financial independence in old age is an important factor for a comfortable life. Retirees can take out a loan for a variety of tasks, from buying appliances and repairs to travelling and medical expenses. Traditional banks often offer loans with less favourable terms, high rates and age restrictions. Alternative online platforms allow older borrowers to get money faster, at a lower cost and without complicated bureaucratic procedures.
Let's summarise and highlight the key advantages of loans without a bank:
Flexible terms: You can choose the amount and term of the loan;
Fast processing: The decision on the loan is issued within a day;
No hidden fees: Fixed payments and transparent terms;
Accessibility: Pensioners can get a loan even after the age of 70.
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