As the name implies, this type of loan is aimed at those people who no longer have a full-time job because they became pensioners.
Normally these people are 65 years of age or older and are a very interesting potential client for lenders since it is very difficult for them to stop receiving income from their pensions.
Which means that if they do not meet their payments, the lenders can withhold part of their pensions to settle the debt.
Type of loans to retirees and pensioners
Currently depending on the country, you can find variations of the following loans:
Loans against property
In this case the lender grants an amount of money to the applicant and he does not have to pay any monthly fee since upon death, the lender takes ownership of the property.
In other words, the lender buys the property but can only seize it when the applicant has died.
Similar to the previous case. The lender gives money to the applicant monthly until he dies, which will be when the lender will become the owner of the property.
Personal loans in guarantee of pension
As the name implies, the applicant offers his retirement pension in the form of collateral to the lender.
Government loans to pensioners
There is a type of loan for pensioners that is not granted by a private financial entity, but is offered by the State itself.
Normally these loans have fewer requirements and a much lower interest rate than loans from private entities, as they seek to support older people who want to get out of poverty or leave their family members in a better financial situation.
When to use state loans and when to use private loans
Although both are very useful tools for all pensioners, they have different advantages and disadvantages:
- State loans are a very good option for those retirees who want to invest money in their family; such as buying study supplies for their grandchildren or leaving a small family business for their children. With these the heritage is maintained and may be inherited.
- Loans from private entities, for example those requesting a property in the form of collateral, are very useful for those retirees who wish to liquidate their assets to enjoy their retirement more comfortably. They are especially interesting if there are no heirs or they do not need help.
Remember that you should always compare different lenders to get the best credit that fits your needs.
In these types of credits you must take special care with private lenders, who often point to retirees with little financial education to keep their property or charge abusive interest rates.