Learn what your financing options are when you’re retired.
As you move into your older years, your lifestyle changes and so do your finances. When that happens, you may find that getting a loan isn’t as easy as it was when you were earning an income from employment.
However, there are lenders that will consider you for a personal loan as a retiree. These loans can help you access to money if you don’t have sufficient time to save for it, or if you don’t want to dip into your equity. Find out what your loan options are in our guide below.
What’s in this guide?
What types of retirement situations are considered by lenders?
- Self-funded retirees. If you earn income from investments such as rental properties or your retirement savings account, you’re referred to as a self-funded retiree. If you’re in this situation, you may require a loan because you don’t have enough cash assets at the moment or you need quicker access to money than your accounts allow. When applying for a loan, make sure you have as much proof of your assets and income as possible to prove to the lender you’ll be able to manage the repayments.
- Those on pension or Social Security. If you receive pension as a form of income, you may still be able to qualify for a personal loan. Be sure to check the eligibility criteria of the lender.
- Retirees who work part-time. If you have steady employment, even if it’s only part-time, this income will be considered by lenders. Remember minimum income criteria may apply, so check this before submitting your application.
- Non-residents. The majority of lenders will require you to be a US citizen or permanent resident. However, some lenders consider non-residents for loans even if they’re a senior. You can compare temporary resident personal loans to learn more.
Personal loans you may be able to apply for as a retiree
Different loan types available to retirees
There are a few different types of personal loans available to retired seniors:
- Secured personal loans. Secured loans require you to attach a high-value asset as a guarantee, and in return you’re usually able to obtain a lower interest rate. Examples of assets include vehicles or equity in your home.
- Unsecured personal loans. You don’t have to attach any asset to this loan as it’s unsecured. You can use this loan for investment purposes, to take a holiday, buy a used vehicle or to consolidate debt.
- Peer-to-peer loans. Peer-to-peer loans are funded by regular investors rather than banks or institutional lenders. Money is lent and borrowed through a regulated online marketplace.
- Car loans. If you’re looking to purchase a new or used vehicle you can consider a car loan. These loans offer competitive rates because the vehicle you purchase is used to guarantee the loan.
- Reverse mortgages. Reverse mortgage loans offer you a line of credit, regular income stream or lump sum payment by borrowing against the income in your home. While traditionally thought of as high-risk, reverse mortgages are becoming a more mainstream borrowing method.
- Short term loans. If you have bad credit or need emergency money, a short term loan might be worth considering. Keep in mind the high cost of these loans before you apply.
- Bad credit loans. There are still personal loan options if your credit is less than perfect. Some loans are available up to $5,000 or more for bad credit applicants.
- Debt consolidation loans. Some loan options are specifically tailored to debt consolidation, if that’s the loan purpose you have in mind.
Linda and Grant, a retired married couple
As a couple, Linda and Grant receive $1,270 in retirement benefits twice a month. They’ve paid off their house and have a small source of additional income from a rented-out investment property. While their payments are enough to support their lifestyle, they don’t have the means to make additional larger purchases. When their car stopped working, they considered a personal loan to buy a replacement.
Option 1: They looked into an auto loan to purchase a vehicle. Since an auto loan is a secured loan, they found they could get reasonable interest rates.
Option 2: Linda and Grant also looked into an unsecured loan option so that their car couldn’t be taken away in the event they fell behind on payments. They looked into peer-to-peer loans, which can also come with affordable interest rates.
Ultimately, Linda and Grant decided on a peer-to-peer loan because they felt more comfortable borrowing money without collateral attached.
How to know if you’re eligible
If it isn’t clear whether you meet the minimum eligibility criteria for your senior loan, then it’s best to get in touch with a lender before submitting your application. For example, you may have income from investments that isn’t consistent. Lenders won’t be able to guarantee approval before you submit your application. But they may be able to clarify certain criteria or provide you with additional details.
To give yourself the best chance of being approved, make sure you have all of your information on hand before starting the application. This would include:
- Personal information. Your name, contact details and identification information.
- Loan details. Explain how much you need and the purpose of the loan.
- Financials. Remember to include all sources of income and provide evidence of them. You’ll also need details of debts and liabilities.
- Assets. What assets do you own? This may be your own home, rental properties, vehicles or investment accounts.
You may be able to save the form if you don’t have all of your information on hand to come back to it later, or download a PDF of the application form from the lender’s website to find out everything you need before you start.
Financing options for veterans
Did you or your spouse serve your country? You might want to look into lenders that offer personal loan offers specifically for veterans. For example, Pioneer Services has a special financing program for career-retired military from $500 to $10,000. Other lenders might have special deals for veterans that they don’t advertise, so it doesn’t hurt to mention your service when looking for financing.
Finding the right loan in retirement can be key to keeping your finances secure. It’s important to compare all of your options thoroughly before submitting your application.