Unforeseen financial exigencies or unplanned expenses can occur in any life-stages, including during the post-retirement life. For pensioners, the steep increase in the healthcare costs, increasing trend of nuclear families and rising life expectancy rates also increases the risk of depleting the retirement corpus. Availing loans to meet the fund shortages also becomes difficult due to the decreased repayment capacity of retirees. As the pension income of retirees is just a fraction of their past salary income, the lower-income in the post-retirement life reduces the loan eligibility of retirees.

Under the current financial system, many lenders tend to offer pensioner loans for senior citizens, depending upon their age, income etc. Getting an assessment of the available lenders and loan options for the retirees would assist in understanding the road ahead and steps required to take the personal loan post-retirement at best HDFC Personal Loan Interest Rates.

Why there is lower credit access for pensioners

A personal loan is one of the best credit options for dealing with unforeseen financial exigencies. However, most banks and NBFCs require their personal loan borrowers to complete their loan repayment by the time they reach 60 years. This leads retirees relatively less for applying for personal loans. Even the rates offered to them may be higher due to the risk of old age. In such scenarios, pensioners should not forget to check the HDFC Personal Loan Interest Rates before applying with any lender.

While some banks do tend to offer pension loans, a variant of personal loans, these can only be availed by their existing account holders receiving their pension through those banks. Even then, banks may have upper caps on the maximum age till which pensioners can avail pension loans. Banks may also ask loan guarantees from the spouse (in case of family pensions) or earning children or third parties for approving pension loan applications.

Hence, pensioners in their 60s can get their personal loan approved by keeping in mind the following points and checking their HDFC personal loan eligibility:

Are you eligible to take a personal loan post-retirement?

Availing a personal loan in your 60s isn’t as easy as that for the younger age group, with lenders being quite apprehensive in lending to senior citizens. However, some lenders tend to offer pensioner loans to them, with the maximum age limit of a borrower being up around 70-75 years at the end of loan repayment tenure. This sometimes results in the availability of shorter tenures as well as lower loan amounts being offered to them when compared to that of lower age groups. Go through the HDFC personal loan eligibility to know your personal loan eligibility as a pensioner.

Moreover, while evaluating a senior citizen’s personal loan application, lenders or banks may prefer income sources like rental income as the primary income rather than a pension. Apart from the eligibility criterion, ensure to not ignore the applicable HDFC Personal Loan Interest Rates when applying for a loan.

To avail of a personal loan in your 60s, the below-mentioned tips can be helpful in your loan’s approval:

Boost your loan approval chances-Loop in a co-applicant or guarantor         

In your 60s, most of the lenders would be hesitant towards lending to you, especially for an unsecured loan like a personal loan. This is largely due to uncertainty of your life span and income constraints. This often leads to their loan applications getting rejected, or lenders might cover their high credit risk by charging slightly higher HDFC Personal Loan Interest Rates to senior citizens. To boost the chances of your personal loan application’s approval, consider opting for a joint personal loan, preferably with someone who is an earning member (with stable income) as the co-applicant.

Additionally, the repayment capacity of the borrower and co-applicant are checked before the pensioner’s loan approval. Your Fixed obligation to income ratio or FOIR, i.e. ratio of your income already being paid out as credit card bills and loan EMIs, is a major player in adjudging your repayment capacity, along with income. Make sure your co-applicants FOIR isn’t more than 50-60% to improve your chances of personal loan approval. Also, to know the preferred FOIR of the lender, have a look at the HDFC personal loan eligibility criterion.

Avoid damaging your credit score-Check your loan eligibility before applying to multiple lenders.

Each time you apply for a personal loan with multiple lenders, they take out your credit score through your credit reports or check your credit history from credit bureaus to check your credibility. Such credit checks by banks or lenders are known as hard enquiries, which pull down your credit score by a few points, thereby proving to be detrimental to your credit score over time.

While taking a personal loan in your 60s, even if you had been maintaining a good credit score & managing your credit cards & loan repayments in a disciplined manner, multiple loan applications can harm it. To avoid this, pensioners can make use of loan eligibility calculators available on various online lender websites. Such calculators would not only tell you whether you are eligible for the personal loan but also save your time since you wouldn’t have to wait for the lender’s response post submission of the loan application. Besides using these calculators, ensure to factor in the applicable Personal Loan Interest Rates as per your eligibility or the personal loan.

Make sure the EMI is affordable-Use online personal loan EMI calculator.                 

Limited sources of income for pensioners often make it difficult for those aged above 60 to attain a personal loan. By checking the HDFC personal loan eligibility criterion, applicants can have a better idea of their eligibility and approval chances. Moreover, the presence of online personal loan EMI calculators has highly benefited many borrowers in calculating the exact EMIs according to the required loan amount, loan tenure and interest rates applicable. For retirees as well, the online EMI calculator tool assists in planning their financial outflow upon taking the personal loan. By using the calculator, borrowers can adjust the loan tenure as per the loan amount required and the HDFC Personal Loan Interest Rates to arrive at an affordable EMI. Hence, this would result in being a helpful tool and step for pensioners to be prepared for the loan repayment in the form of expected EMI payout per month.

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Summing it up

To help pensioners to mitigate financial shortfalls during retirement years, many lenders provide a separate category of loans for pensioners of central or state government, their undertakings, defence personnel, corporate pensioners etc. Generally, depending upon the varying eligibility criterion amongst lenders like HDFC personal loan eligibility, the quantum of the loan amount is generally based on the monthly pension’s amount or a maximum limit set by the lender. The loan is also subject to the current age as well as the expected age of the applicant at the end of the personal loan tenure. Additionally, as a further benefit to those requiring funds in old age,  the processing fee, prepayment charges, margin money etc., may be waived for such loans for pensioners.

By Hemant Kumar

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