Getting a loan when you’re retired

While it is possible to get a personal loan when retired and living off a pension, it’s important to note that lenders will still look at your income and credit score. This includes your pension, any rental income, and any pay from part-time jobs. They’ll also look into your credit score, including your credit history, to make sure you’re a responsible borrower. Both of these will impact how much you can borrow, for how long, and the interest rate on the loan.

Related: Can I get a loan while receiving benefits?

Is there an age limit on personal loans?

While there is no real age limit on getting a loan, some lenders will only lend to applicants up to the age of 75. While you can get a loan while receiving a pension, it may be harder, and you may need to shop around to compare a range of lenders to find the best deal. Some loan companies also have a minimum pension income threshold you must be under to be eligible for a loan. In contrast, others won’t grant long-term loans to older people due to higher risks of the borrower passing away before paying back the full amount.

Is it risky to get a loan over the age of 60?

Borrowing at any age comes with some level of risk, whether you have an unsecured or secured loan. Whichever type of loan you choose, you need to make sure that you can pay back the loan instalments in full every month. If you fall behind, you could start to build up interest and penalty charges, as well as damaging your credit score. Plus, if you secure a loan while on a pension and you can’t repay it, your home could be used as collateral.

What to consider before taking out a loan as a pensioner

First off, you should consider whether a loan is right for you. This will depend on your personal situation. Consider what the loan is for, how soon you need the money and if there might be an alternative – such as using money-saving hacks or asking family members to help out.

If you’re sure you want to apply for a loan during retirement, here are some things you should consider:

1. The type of loan: From personal loans to secured loans, like those that use your mortgage or car as collateral, think about the risks that come with each, especially if you’re on a fixed pension. For more information, check out our guides on the types of loans.
2. The purpose of the loan: Whether you’re borrowing for unexpected bills, an emergency fund, or a large one-off purchase, it’s important to make sure that you pick the right loan for how much you need and how long you will need to pay it back. Learn more about our loans for life.
3. Loan terms: Interest rates can vary based on your credit history and loan type, and for retirees, this may be higher due to the risk of relying on fixed or limited income. Make sure your repayment schedule fits within your budget as well; loans with shorter terms may have higher monthly bills.
4. Your credit history and income: These affect your ability to secure and pay back a loan. Retirees with a high credit score will get better rates, and lenders will usually require proof of your income to ensure that you can pay it back reliably.
5. Impact on retirement funds: Consider how taking out a loan while on a pension will affect your savings and whether you can comfortably afford the repayments. If borrowing means you could deplete your funds, it could harm your long-term financial security.

Read more: What affects credit score?

How much can I borrow if I’m a pensioner?

This depends on a range of factors, including your age, income and credit rating. If you have a higher credit score and can afford repayments, the larger the loan you are likely to be able to take out. Just make sure never to borrow more than you need. At Sunny, we offer personal loans for as little as £100 to £5,000 and you can borrow from 3-36 month periods. Learn more about our loan values here.

Can pensioners get a loan with bad credit?

While it’s harder to get a loan if you have a lower credit score, it’s not impossible. There are lenders who offer loans to pensioners who have a poor credit history as they understand that each situation is different and unique. Just note that your options for how much you can borrow may be limited, and the interest rate may be higher. At Sunny, we offer bad credit loans for any age and you can easily compare your options without harming your score further. If you can’t get a loan, you can always take steps to improve your credit score first.

What happens to the loan if I die?

Getting a loan later in life comes with a lot of risk for yourself and the lender. If you die and your loan has not been repaid, the debt doesn’t just get written off. Usually, the leftover debt is taken from your estate; any leftover cash and assets you may have.

Pros and cons of getting a loan while on a pension

Ultimately, choosing whether a loan is a good choice for you depends on the purpose of the loan, how much you are borrowing and your personal circumstances, specifically your financial stability. It’s important to assess the pros and cons when making this decision.

Related: Is a loan or credit card best for you?

How to get a loan while on a pension with Sunny

If you’re sure that a loan while in retirement is the right choice for you, we’re here to help. At Sunny, we offer flexible monthly repayments of up to 36 months, and you can borrow small and large amounts. With a wide range of lenders, you can easily compare loan types and see your eligibility before you apply. Just use our loan calculator today for a soft credit check, which won’t harm your credit score, to see if you are eligible for a loan. If you’re eligible and are happy with the interest rate and payment plan, you can continue your application with our panel of lenders. Or, if you have any questions, take a look at our FAQ section or read our Good Vibes blog for all things money-savvy.