Although most retirees have a secure income, it is not easy for them to find a suitable loan. The reason for this lies solely in old age and the associated mortality risk. A lack of security, however, only plays a subordinate role for pensioners. Often, 60- or 65-year-olds have problems getting normal installment or consumer loans.
From the age of 75, the situation is almost hopeless. However, there are certain alternatives that also allow pensioners to find a suitable loan and thus fulfill their personal wishes. In this context, it may also be necessary to provide a surety and / or take out residual credit insurance.
Requirements for lending
Anyone wishing to take out a loan in Germany must be of legal age, have a fixed income and a permanent place of residence and must not have any negative Credit Bureau entries. Similar requirements apply to a foreign loan. Here, however, the Credit Bureau information does not matter at all. Whether or not there is a certain maximum age for bank loans differs from case to case. It also depends on whether pensioners can get a loan or not.
Most retirees even have more collateral than a normal worker. This is essentially due to the fact that your pension is not only paid regularly, but cannot be lost under any circumstances. An employee could become unemployed at any time and lose his salary believed to be safe. Many retirees are even seriously interested in further increasing their income and therefore pursue one or more part-time jobs. This also speaks for them.
On the other hand, it must be pointed out that the risk of becoming seriously ill or even dying during the term of an installment loan increases significantly with age. If the term of the loan is very short and only one to two years, the banks may be willing to accommodate the pensioner accordingly and to approve his loan application. If this is not the case, a guarantor, who should ideally come from his own family, could step in accordingly, with the consequence that an originally rejected loan application can still be approved by a pensioner.
Anyone who has additional security as a pensioner, such as a debt-free property, a securities account, larger cash assets or other valuables, also has a very good chance of getting an installment loan.
With an overdraft facility, there should generally be no problems. As long as the monthly pension is regularly paid into the account, the overdraft facility can be drawn on at any time and repaid step by step.
The residual credit insurance
In principle, residual credit insurance is always taken out voluntarily. The bank must never make its existence a condition for granting a loan application. This applies not only to employees, but also to pensioners.
The costs for the residual credit insurance are never calculated separately, but are always included in the annual percentage rate and the monthly loan installments. It is essentially divided into three areas and covers the risk of unemployment, accidents and death. With a pensioner, the residual credit insurance can be limited to the latter two areas.
If the insured event occurs, the residual credit insurance pays out the monthly loan installments or the outstanding balance of the loan. The monthly loan installments are taken over in the event of unemployment that is not your own fault, a long illness or an accident, and the remaining loan amount is paid in the event of death.
Taking out residual credit insurance has a number of advantages. If the pensioner dies, his surviving dependents do not have to pay for the loan. A residual credit insurance is a life insurance with a falling sum. The further the loan repayment has progressed, the less money the insurance company has to provide in an emergency to compensate for the remaining loan amount.
Foreign banks are rarely given a loan to pensioners. They have not only set a certain minimum age, but also a maximum age for their loans. This maximum age is often 55 or 58 years.
If you turn to a private credit broker, you may have a much better chance of getting a loan for pensioners. Many private credit intermediaries specialize in retirees or other target groups, where it may also be very difficult to find a suitable loan.
However, there should never be any prepayment for a loan for pensioners. If the credit intermediary already insists on payments in advance, this may be a sign that this is dubious.
Numerous private credit brokerage exchanges have emerged on the Internet in recent years. However, they do not act as lenders themselves, but only try to bring private lenders and private borrowers together. If a private lender trusts that the retiree is reliable and repays his money properly, there is usually a good chance that the loan will be successfully brokered.
Many pensioners who urgently need money turn to a person they trust from their own circle of friends or relatives and ask for help. However, this presupposes that the persons concerned have enough money and sufficient creditworthiness to be able to step in accordingly. This will not always be the case, especially in times of high unemployment and insecure employment.