Installment loan for seniors
Installment loans are consumer loans because the customer repays the borrowed money, including interest, in monthly installments. The term senior is used inconsistently for all people from the age of forty-five, fifty or sixty years or especially for pensioners. How easy it is for senior citizens to borrow naturally depends on the definition of the term, but also on the bank.
Loans for older workers
An installment loan for a senior citizen in the sense of an older worker is easily available if the income from work is sufficient to repay the loan. Because the statutory pension is less than the income from work, banks typically require that a loan taken out to older workers be repaid before retirement. An exception is more easily possible when borrowing from a bank branch than when applying for a loan on the Internet if the payments from the statutory pension and from private pension contracts continue to allow the pension gap to securely repay the loan.
However, the start of retirement cannot be predicted with certainty, as there are different options for early retirement. In contrast to German banks, which are prohibited from age discrimination, Swiss banks often set a maximum age of fifty-eight for their Credit Bureau-free loans and therefore do not grant installment loans to seniors from the specified age.
If the term “senior citizen” is broadly defined, an installment loan for a senior citizen of the bank offers even higher guarantees than lending to young people, because at fifty years citizens approach borrowing much more responsibly than at twenty years. Most senior citizens check their creditworthiness themselves before submitting an application and are stricter than the bank.
Borrowing by pensioners
Banks are often reluctant to give an installment loan for seniors in the sense of pensioners, and some banks almost always refuse to borrow. The reason for the hesitant mortgage lending is not only the lower income of the elderly compared to a salary, but also the danger of his death.
The amount of the pension or pension does not necessarily make borrowing impossible, especially since most seniors generate additional income from private pension insurance in addition to the statutory benefits. If the income is below average, the likelihood of a loan approval can be increased by agreeing on a long term and correspondingly low monthly loan installments.
For pensioners, extending the loan term is inextricably linked to an increase in the likelihood of death before the loan is fully repaid. For this reason, it is often mandatory to take out credit default insurance when borrowing from seniors, which makes the loan more expensive. For some banks, proof of existing risk life insurance is sufficient to replace the credit default insurance.