Compare Loans for Pensioners in 2025

9 types of loans for pensioners

As long as you can meet income requirements from lenders — along with credit and other requirements — there is a wide variety of loans for pensioners. Check out these nine options to see if one works for you and your budget.

Personal loans for pensioners

You can get a personal loan from banks, credit unions or online lenders, and there are loans for pensioners and other retirees with a variety of credit scores. Loan amounts typically range from $1,000 to $50,000, although some lenders offer up to $100,000.

Interest rates start as low as 5.99% and can go as high as 36.99%, but you’ll need a good credit score to get the best rates. Personal loans for pensioners can be used for almost any purpose, with consolidating debt or making home improvements two common uses.

Car loans for pensioners

Unlike most personal loans, car loans for pensioners are typically secured, meaning the vehicle is used as collateral for the loan. Secured auto loans are usually easier to get than unsecured loans, and they often come with lower rates.

However, you may need to come up with a down payment, which can get you a better rate and lower monthly payment, but coming up with the cash could be a strain on your budget. You may also want to consider the pros and cons of leasing a car versus buying one.

Personal lines of credit

A personal line of credit is basically a cross between a credit card and a personal loan. Like a personal loan, you have access to cash, but instead of a lump sum payment, you draw on the credit line as needed and it replenishes as you pay it back.

Rates for personal lines of credit are typically better than credit cards — starting around 8% for good credit — and are a good option if you’re not sure how much you need to borrow, you’re using it for an ongoing project or you want an emergency fund on hand.

Reverse mortgages

If your pension or other retirement income isn’t enough to live comfortably, some retirees opt for a reverse mortgage, which allows homeowners to borrow money against their home’s equity. And instead of making monthly payments, the reverse mortgage pays you — in a lump sum, line of credit or monthly income stream.

But interest and fees accrue on the loan balance, so the balance gets bigger over time. You’re also still required to pay the taxes, insurance and maintenance of the property as part of the loan agreement. And most reverse mortgages are only available to homeowners over 62 who own their house outright or who have paid off most of their mortgage. The loan balance becomes due when you sell, move out permanently or die.

Home equity loans

For pensioners who own their homes, a home equity loan is another way to leverage your home’s equity in exchange for a lump sum payment you’ll pay back in equal monthly installments at a fixed interest rate.

Rates are typically better than many other loan types because the loan is secured by your home, but that also means you are putting your house at risk if you can’t make the payments. Most lenders also require that you have at least 20% equity to qualify, although some lenders may accept less.

Home equity lines of credit (HELOCs)

A HELOC is similar to a home equity loan, except that you have access to a revolving line of credit instead of a lump sum, and they usually come with variable rather than fixed rates. A HELOC might make sense if you don’t know how much you need to borrow or are using it for ongoing expenses like home renovations or medical bills.

You can usually draw on a HELOC for about 10 years and have the option to make interest-only payments during this time. Once the draw period is up, you’ll repay the balance of the loan with principal and interest payments.

Bridge loans

A bridge loan is a type of short-term financing meant to provide cash flow while you wait for more permanent funding. It’s often used in real estate transactions when you’ve bought a new home but haven’t sold your last house yet. People on a pension might find these loans useful when downsizing to a smaller place or moving to an assisted living facility.

Bridge loans can often be approved and funded quickly — and some allow for multiple borrowers, who are usually family members. But these loans typically come with higher rates and shorter terms than other loan types and often need to be secured with collateral.

Cash advance apps

For pensioners on a fixed income, cash advance apps can offer small loan amounts — typically up to $500 or so — with no interest charges. These apps can be a good option for retirees or seniors who need a loan, especially if you have poor credit, because most cash advance apps don’t require a credit check and often have low or no income requirements.

The downside is that many apps require a monthly subscription to qualify, and you’ll typically pay a fee for same-day transfers. Plus, users may only qualify for small loan amounts at first, but if you only need a small advance between pension deposits, cash apps can be a big help.

Payday alternative loans (PALs)

Some federal credit unions offer PALs from $200 to $1,000 that you can pay back in one to six months at rates capped at 28% — a much better deal than pensioners could get with payday or installment loans. But you’ll need to be a member for at least 30 days to qualify. However, these same lenders may also offer PALs II, which are loans up to $2,000 with loan terms of up to one year that you may qualify for as soon as you become a member.

What types of pensions are considered by lenders?

Pensions in the US are offered by some employers and also by the government to senior citizens and those with disabilities.

• Employer retirement benefit. Some employers offer pensions as a retirement benefit to employees. The amount you’ll receive in retirement is calculated by a formula determined by your employer. Although many employers now offer 401(k)/403(b) retirement plans, some still offer retirement benefits in the form of a pension.
• Social Security. Social Security provides retirement income to people of a specific age after they retire from their careers. Social Security also provides disability income to people with certain disabilities who are unable to work.

Some lenders consider disability benefits a form of income along with employer and Social Security retirement payments when evaluating your ability to repay the loan.

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How to apply for a loan as a pensioner

In general, you’ll need to follow these steps to apply for a loan.

1. Check your credit. Knowing your credit score can help you figure out the best place to apply.
2. Figure out how much you need. Don’t borrow more than you need, and make sure you can afford the monthly payments.
3. Compare lenders. Be sure to compare multiple lenders to find the best deal, and get prequalified to check your rate.
4. Check lender requirements. Find out what documentation the lender requires so you’re prepared once you’re ready to apply.
5. Apply. Fill out the application and submit the required documents. If approved, make sure you carefully read the agreement and understand the terms before signing.

Eligibility requirements for a loan as a pensioner

Exact requirements for a loan vary based on the lender and the loan type, but here are the basic criteria:

• Be a US citizen or permanent resident
• Have a credit score of 600 or better
• Low debt-to-income (DTI) ratio
• Proof of income — from pension and other sources, if applicable
• Have an active bank account

If you’re applying for home equity financing or a reverse mortgage, you’ll also need to meet additional criteria, such as having enough equity in your home to qualify.

What documents do I need to apply?

Be prepared to submit the following information when you apply for a loan.

• Personal information. Name, date of birth, government-issued ID, Social Security number and contact details.
• Proof of income. You’ll need to provide proof of all your income sources, which may include bank statements proving direct deposits, retirement award letters, tax returns 1099s, W-2s or pay stubs.
• Debt details. You may also need to provide information about your current debts, although some of those details can be found on your credit report.

Can I get an advance on my pension?

Yes, but it’s one of the more expensive options out there. These loans are typically called pension advances, pension sales, pension loans or pension buyouts. You sign over your monthly pension payments in exchange for a loan — often between five and 10 years.

They’re similar to payday loans in that they’re one of the most expensive financing options out there, with APRs easily topping 100%. Some lenders also require borrowers to purchase a life insurance policy, naming it as the beneficiary — an extra expense.

In fact, the Consumer Financial Protection Bureau (CFPB) warns against these types of “loans” and has sued firms that used predatory tactics to trick borrowers into borrowing against their pensions without disclosing high rates and fees.

The CFPB especially cautions borrowing from a pension advance company that claims it’s endorsed by the VA, because It’s illegal for lenders to take military pensions and veteran benefits. Former service members are ineligible for a pension advance unless they receive a pension from elsewhere. Either way, it’s an expensive option meant only for emergencies.

Frequently asked questions

What if my pension benefits are less than the lender’s minimum income requirements?

If your pension benefits are less than the lender’s minimum income requirements — and you have no additional income sources — you may not be eligible to apply for that specific loan. You can compare more personal loan options to find one with more lenient eligibility criteria.

Can I take out a loan against my employer pension?

Whether you can take out a loan against your employer pension depends on the company that holds your funds. Check with your employer’s human resources (HR) department or call the company holding your funds directly to inquire further.

Can I take out a loan against my government Social Security pension?

Technically, no. The Social Security Administration (SSA) doesn’t offer loans. Some eligible applicants have applied for Social Security and then withdrawn their application within 12 months using Form SSA-521 to get benefit payments and then repay them. This is only allowed one time by the SSA.

Can I use my pension as collateral for a loan?

Some pensions — such as VA benefits and military pensions — cannot be used as collateral for a loan because it’s illegal to seize those assets. You may be able to use other types of pensions as collateral, but it’s generally not recommended because lenders that offer these loans typically charge interest rates that are much higher than other loan types.

Are there special home loans for pensioners?

There aren’t home loans specifically for pensioners because lenders aren’t legally allowed to base loan decisions on factors such as age, gender, race, and other demographic information.

However, some home loan programs, such as VA, FHA and USDA have more lenient income, credit and down payment requirements that might make it easier for pensioners or seniors to purchase a home.

To make sure you get accurate and helpful information, this guide has been edited by Megan B. Shepherd as part of our fact-checking process.

Written by

Lacey Stark

Writer

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Lacey Stark is a freelance personal finance writer for Finder, specializing in banking, loans, investing, estate planning, and more. She has 20 years of experience writing and editing for magazines, newspapers, and online publications. A word nerd from childhood, Lacey officially got her start reporting on live sporting events and moved on to cover topics such as construction, technology, and travel before finding her niche in personal finance. Originally from New England, she received her bachelor’s degree from the University of Denver and completed a postgraduate journalism program at Metropolitan State University also in Denver. She currently lives in Chicagoland with her dog Chunk and likes to read and play golf. See full bio