Of course, older people still have wishes, for the fulfillment of which they sometimes want to finance with a loan. However, financing for pensioners is not so easy to obtain despite a good pension. Banks carefully check the creditworthiness of their customers in order to keep the credit default risk low. Financing for retirees can be doomed to fail due to age. From the banks’ point of view, pensioners carry a biological risk that makes them a group of people who are only granted credit up to a certain age. The age limits are not uniform, but can vary widely from bank to bank. While one bank is no longer able to finance pensioners over the age of 70, there are other banks that also provide pensioners with a short term in their mid-70s.
In some cases, retirees are literally marginalized due to their age, which is close to the age discrimination border and is often unfairly complained about by consumer advocates. In principle, if pensioners die during the term of a loan, this is not a particularly high risk for the bank that the loan will fail. If pensioners have heirs, they inherit not only assets but also current liabilities, of course.
The age limits on loan for pensioners
When it comes to lending to pensioners, there are still age limits that are quite far from the current life expectancy of women and men. This means that pensioners are only financed up to the age of 70, although the average life expectancy for men and women is over 80. In theory, it would not be a problem if pensioners in their mid or late 70s were granted a 12 or 24 month loan. There are exceptions to this at some banks, but they are in principle to be looked for with a magnifying glass.
Pensioners are generally very reliable borrowers
The risk of credit default among retirees, apart from the risk of death, is much lower than among younger borrowers. Income in the form of a pension is safer than working income because it is paid continuously. Pensioners cannot become unemployed. Due to the existing life experience and the resulting clarity, the pensioners are reliable when it comes to payment behavior.
Pensioners rarely make hasty purchase decisions and rarely take over financially. As a rule, they fulfill their obligations as agreed. Statistics show that the repayment rate among pensioners is over 99 percent. Just because of the risk of death, many banks are demanding a more recent solvent guarantee when funding retirees.
No loan for pensioners without a guarantee
Unfortunately, banks do not offer financing for pensioners of all ages. The likelihood that pensioners will easily get a loan is particularly high if they make the loan application together with a younger guarantor. But this also means for pensioners that if they want to take out a loan, they have to ask their children or grandchildren in their family if they are willing to provide the guarantee. Because many retirees do not want it that way, they forego a loan. Many retirees have built up reserves over the course of their lives that they use when they need to make major purchases
The loan for pensioners in retail
It is much easier for retirees who want to finance goods directly with a loan. The financing of a senior bed in a furniture store is more likely to be granted to pensioners than a modernization loan for the age-appropriate renovation of residential property.
In order to get a good overview of what is possible and what is not possible, pensioners should inform themselves beforehand and use the possibilities that the Internet offers them. Some banks directly advertise that they also grant loans to pensioners.