6 ways to borrow when retired

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Here are 6 options of loans for seniors, so you can cater to your immediate needs.

The reasons for borrowing money

Let’s face it: we’ve all been there. There are plenty of situations where you might find yourself in need of cash and have to ask someone to lend you some until your check gets through.

This is life and anything can happen at any given moment so there’s no way to be fully prepared for an emergency or sudden expenses.

There are all those everyday things going wrong in the worst possible time. Your car might break down, an unaccounted for utility bill arrives. Or you found exactly the thing you’ve been looking for when you are missing just a bit of cash.

So, is there a way to get this little extra in time when you need it? There’s no way you can get an advance on your paycheck like in good old times when you were still employed. And it’s not always convenient to ask friends or family for cash.

But there’s still a way to get this cash on time. In fact, there are six ways to borrow money after you retire and they are depending on your needs and assets.

Personal loans

There are several forms of personal loans available to seniors. The fees are relatively high, so there are some major decisions to make before applying for a personal loan.

Those loans can be secured, meaning there’s collateral (a car, a house, jewelry, or antiques) that might be seized by the lender if the loan is not paid in time. Or, there’s an unsecured loan option that demands no collateral but has higher interest rates.

Credit history is an important factor in how many personal loan options are available to you. As you can expect, a good credit score opens up more options. If you happen to have a poor credit rating, you should consider improving it before applying for a loan. Or you can find a direct lender and apply for no credit check loan.

When it comes to choosing between fixed or variable interest, it’s safer to go with a fixed one. This way you can avoid an increase in loan payment which is possible with the variable interest.

Peer-to-peer loans (P2P)

Peer-to-peer loans are relatively new practice. They are another possibility opened in 2005 by the evolution of the internet. The P2P online pages connect the borrowers and the investors directly. The rates are pre-determined and differ from site to site. There are no financial institutions involved, that’s why those types of loans are also called “crowd landing."

Online payday loans

Yet another option becomes available for those familiar with the Web - payday loans from direct lenders. It is similar to P2P lending but has few important differences. A payday loan is a type of unsecured personal loan (no collateral necessary). The size of it depends on your monthly income. Taking this loan is like getting an advance on your paycheck. It’s easy to apply for and usually needs one business day to appear on your bank account. Seniors use payday loans mainly for small emergencies. If you follow through with your agreement, do not have high fees. The main difference with the P2P loans - you get offers from multiple lenders you can choose from. While on the P2P page there’s a unified flat rate used for everyone.

Car loan

If you need to change your car for a better one (maybe even buy your first car), there are car loans out for you. These loans were designed to serve the needs of a tremendous car market. Usually the rates are low and the conditions are flexible. A car loan is a type of a secured loan with the car as a collateral.

Home equity loan

Home equity loan is secured by the 15% to 20% of borrowers equity in their home and needs a good credit score to apply for. The loan is given to you with a fixed rate and must be returned in arranged installments. In case the money is later spent on house repairs, this loan can have a deductible interest.

Reverse mortgage loan

This loan’s name is rather self-explanatory. The reverse mortgage loan is another type of loan secured by your home. With this loan, you can get a lump sum or monthly payments, both based on your home value. The repayment starts when the homeowner dies or moves out. In the first case, the loan has to be paid off or refinanced by the heirs. In both cases, the house can be sold to pay off the loan.

In conclusion

If you need to borrow some money when retired, there are options. You need to evaluate your situation and carefully weigh the available loans. In any case, it is crucial to read the conditions you agree upon and follow them meticulously.