Retirees in need of funding are far from easily applying for a loan. Because banks are always concerned about the repayment of their borrowed money, which is basically understandable. However, the fact that loans are denied in many places because it is speculated that the borrower will die too soon is a fact that is especially incomprehensible when there are actually enough collateral. Financing for retirees is therefore often not possible without the help of third parties.
The unresolved relationship between pensioner and bank
Banks always attach great importance to collateral when a loan is to be granted. Adequate income and flawless credit rating are always among the aspects that are given the highest priority in a credit check. But when it comes to financing for retirees, a very different factor plays a role that should not be underestimated, namely old age. The rule that applies is simple: the older the applicant, the harder it is to get a loan.
The collateral often plays a minor role. Financing for retirees can be denied even if they have a high, regular and accordingly secure income (the pension). Some banks regulate this by linking the loan agreement to the conclusion of a residual debt insurance. This then takes over the complete repayment of the loan, if the borrower still dies during the term.
A residual debt insurance is basically nothing more than a term life insurance with falling contributions. These are continuously adjusted to the remaining debt. So far, so practical. But the contributions payable may be significant additional costs, which may make the financing of pensioners disproportionately expensive. It is therefore more than understandable if the applicant loses the desire to apply for a loan.
Loans for retirees with the help of third parties
Many claimants in their best years do not even apply for the loan themselves, but to use younger family members. Often daughters or sons take on the loan. Also a kind of generation contract, but there are even more official options.
If, for example, a close relative agrees to be included as a guarantor in the contract, that is enough for many banks to provide financing for retirees. Guarantors always jump in when the actual claimant can not or only partly meet their credit obligations. From this point on, the guarantor is taken into account, which in practice means that he is liable for the repayment of the loan.
The same applies to the co-applicant, who is, however, liable for the loan from the start in this way. Both are required to bring appropriate collateral. Financing for retirees pays special attention to the regular income that should be generated from employment as far as possible. A credit bureau inquiry is also carried out to ensure that the guarantor or co-applicant can also fulfill his obligations.
However, there are already some banks that have responded at this point and are no longer too skeptical about financing for retirees. It is not least due to the ever-increasing average age in this country, that in some institutes has begun to rethink. Although such loan offers specifically for the financing of pensioners are not yet ubiquitous on the market, they are no longer an elusive exception. Pensioners should therefore also consider the possibility of looking for a loan away from their own house bank in order not to have to put up with any disadvantages.