LOANS FOR PENSIONERS - EVERYTHING YOU NEED TO KNOW
)
It can be challenging when situations arise in old age that require a loan. Be it for renovations, travel or larger purchases - the lending criteria of credit institutions are often stricter for pensioners, as the risk of payment defaults increases.
How much money can I borrow and what term is possible?
There are various factors that can influence the loan amount and term. We have summarized the most important ones for you:
Loan amount
Income: With many providers, the amount of the loan depends heavily on your monthly income and credit rating. Banks usually check whether your pension is sufficient to cover the monthly installments. With pawn loans, your possible loan amount depends on the value of your item.
Collateral: If you can offer the bank additional collateral such as real estate, the loan amount could be correspondingly higher. With pawn loans, you can use a wide variety of collateral as security for your loan and do not have to meet any further requirements.
Age: The older you are, the more cautious banks may be when granting loans. This can affect the maximum loan amount. Pawnshops are also an exception here, as they only accept your collateral as security.
Runtime
Age: Many banks set a maximum age of around 75 to 80 years for the repayment of your loan. The older you are, the shorter the possible term of your loan will be.
Type of loan: Mortgage loans for pensioners can have terms of up to 10-20 years, consumer loans are generally shorter with a term of 2-10 years. Pawn loans in Germany run for at least 3 months, but the loan can be extended or reduced at any time before full repayment.
Credit rating: While your collateral is sufficient as security at a pawnshop, your credit rating plays an important role at banks. The better your credit rating, the more flexible your term can often be.
Our tip: Compare offers, as banks often have very different conditions and maximum limits. There are also banks that are experienced in lending to pensioners and have specialized in these offers. Pawn loans are suitable
Is a Schufa check always carried out if you want to take out a loan as a pensioner?
Most credit providers always carry out a Schufa check, as it is a central component of most credit assessment processes. This ensures the applicant's creditworthiness and includes it in the risk assessment. The only exception is pawn loans, as the partial value of your collateral for pawnshops such as CASHY is sufficient as collateral.
Below you will find an overview of when and why various providers make the query:
Form of credit | Background |
|---|---|
Consumer credit | The Schufa query is carried out by default to ensure your solvency. |
Car leasing | The standard Schufa query is carried out to check your financial situation. |
Credit cards with partial payment | A Schufa check is always carried out, as your creditworthiness must be guaranteed. |
Small loan or mini loan | Here too, your credit rating is always checked to avoid payment defaults. |
pawn loan | No credit check is carried out for a normal pawn loan. The partial value of your collateral is sufficient as security. |
Choose which item you would like to use as collateral for a pawn loan. Get your instant quote online now.
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
As a pensioner, do I need sufficient income for a loan?
For most forms of credit, you need a good credit rating and regular income. However, there are exceptions. Below you will find an overview of the types of loans for which you absolutely need income - and for which types of loan you do not.
Form of credit | Income requirement |
|---|---|
Banks | Yes |
Credit card installment payment | Yes |
Microloans and mini-loans | No |
Pawn loans | No |
What documents do I need as a pensioner to take out a loan?
To take out a loan, pensioners generally need to provide a number of documents to prove their financial situation and creditworthiness. The only exception is pawnshops, as you are liable with your collateral and your financial situation is usually secondary. Here are the most important documents typically required for consumer loans:
Personal documents
Identity card or passport: This is required for identification.
Confirmation of registration: This provides proof of residence. Alternatively, in some cases a current bill from a utility provider such as electricity and water is also accepted as confirmation.
Financial documents
Pension certificate: Your current pension certificate serves as proof of monthly payments.
Bank statements: Current bank statements for the last three to six months show your income and expenditure and provide an overview of your financial situation.
Additional proof of income: If you receive additional income such as rental income, company pensions or investment income, you will also need confirmation of this.
Proof of existing loans and liabilities: If you have credit obligations or other financial obligations, you will usually have to provide documents for these as well.
Collateral documents
If you are required to provide collateral, you have various options
Real estate ownership: You can use real estate as collateral through land register excerpts, appraisals or purchase contracts.
Life insurance: In Austria, you can also use insurance policies as collateral. However, this is only possible if a corresponding surrender value is already available.
Collateral: At the pawnshop, collateral is the only requirement you need for a loan. If you own gold jewelry or a valuable Rolex, for example, you can use these items with a partial value as collateral for your loan.
How to proceed when submitting your documents
Preparation: Gather all the necessary documents in advance so that the loan application can be processed smoothly and quickly.
Check: Check in advance whether all documents are up-to-date and complete. Outdated or incomplete documents can delay the process.
Advice: In some cases, it may be helpful to seek advice from a financial advisor or directly from the bank to ensure that you have all the necessary documents.
What fees should I expect to pay?
The interest rates and fees depend heavily on the respective provider. Below you will find a current overview¹:
Consumer credit:
Interest rates: Interest rates vary between 2.99% and 14.99% and depend on your credit rating and the exact loan type.
Processing fees: Some banks still charge processing fees, but these are becoming increasingly rare.
Early repayment fee: Early repayment fees may apply, often ranging from 0.5% to 1% of the remaining balance.
Mortgage loan:
Interest rates: Mortgage loans are available from very low interest rates of 0.25% and can reach up to 6%. This depends on the specific conditions of the loan and your existing collateral.
Notary fees: These are around 2-5% of the purchase price.
Land register entry: Costs around 1.1% of the purchase price.
Land transfer tax: This is usually 3.5% of the purchase price.
Car loan:
Interest rates: Interest rates for car loans start at around 2.99% and can go up to 14.99%, depending on your credit rating and the provider.
Processing fees: These vary depending on the bank and loan type.
Prepayment penalty: Similar to other forms of credit, early repayment fees may apply.
Framework credit:
Interest rates: The interest rates for credit lines vary between 5% and 15% p.a., depending on your creditworthiness and the bank.
Fees: Commitment fees and account management fees may apply.
Installment loan:
Interest rates: The interest rates for installment loans are between 3.49% and 10.99% p.a. and depend on your creditworthiness and the credit institution. You should make a good comparison here. (e.g. Targobank, Norisbank)
Fees: The processing fees vary depending on the bank. Early repayment penalties for early repayment amount to around 0.5% to 1% of the remaining amount.
Credit card with installment facility:
Interest rates: These can be very high, typically between 10% and 20% p.a.
Fees: You pay additional annual fees, cash withdrawal fees and possibly other fees such as foreign transaction fees.
pawn loan:
Interest rates: At CASHY, the monthly interest rate is 1% per month. The manipulation fees are fixed by law up to € 300 loan amount. For pawn loans above this amount, you pay 3% of the loan amount per month. Further details can be found in the fee schedule.
Sources: Check24,Verivox, Capitalo
¹ Please note that this information is a snapshot in time. We recommend that you make detailed comparisons before signing a loan agreement and check the current offers from various banks. This way you can find the best conditions for you.
What types of collateral could I use for a loan?
Collateral can play a significant role in determining the loan amount. Below we list the most common forms of collateral used for loans. However, collateral not only serves to increase the possible loan amount, the conditions are also usually better and approval is faster.
Real estate: If you can offer your own property as collateral, this can increase the amount you can borrow from the bank.
Life insurance: In Austria, insurance policies can also be used as collateral. However, only if they already have a high surrender value.
Securities or savings: Banks often accept securities or savings as collateral for a loan.
Collateral: Items such as gold, high-value electronics, coins or cars can be used as collateral for a loan at a pawnshop. As a rule, you have no further requirements for approval of a loan for the partial value of the item.
Guarantees: If you can offer a guarantor with a good credit rating, this often increases the chance of approval and the terms of your loan.
What requirements must a guarantor fulfill?
If you want a guarantor to be accepted by your lender, they should meet the following requirements:
Good credit rating: The guarantor is thoroughly checked by the bank and must have an impeccable credit rating.
Secured income: The guarantor must have sufficient income from employment. This is the only way he can take over the loan installments in an emergency.
Age: Ideally, your guarantor should be of working age to ensure a stable income.
Assets: If your guarantor has assets that can also be liquidated, the loan can also be serviced in this way in an emergency.
However, there are also reasons why banks might refuse a guarantor:
Additional risk: The guarantor himself could become insolvent and the administrative effort may be too high for banks.
Regulatory requirements: Due to risk management guidelines or stricter regulatory requirements, banks may not accept guarantors.
Preference for other collateral: Directly available collateral such as real estate or reserves are often preferred to a guarantee.
How can I recognize reputable providers?
You can recognize reputable credit providers by several features:
Regulation and licensing
Regulation: Reputable lenders are generally regulated by a national financial supervisory authority (BaFin).
Licensing: The justice system, for example, offers you the opportunity to search for companies online . This way you can be sure that companies really exist.
Transparent conditions
Clearly understandable offers: Reputable providers show you all loan conditions clearly and understandably, including interest rates, fees and repayment terms.
No hidden costs: There must be no hidden fees or surprise costs in the contract.
Customer service and advice
Availability: A reputable provider usually offers easily accessible customer service to help with questions and problems. Check whether you can reach your desired provider during the specified service hours.
Personal advice: The possibility of personal advice is a good sign of a trustworthy provider.
Positive reviews and references
Customer reviews: Reputable providers usually have many positive online reviews and testimonials from other customers.
Recommendations: Recommendations from friends, family or independent financial advisors can also be very helpful.
Memberships and certificates
Associations and organizations: Memberships in recognized associations such as the Banking Association, the Association of Financial Service Providers or the Consumer Protection Association are an indicator of seriousness.
Certificates: Quality seals and certificates from independent test centers can provide additional security.
No pressure and no advance payments
No pressure: Reputable providers do not put you under any pressure before you sign the contract and give you enough time to check the offer.
No advance payments: If advance payments or processing fees are required before the loan is approved and paid out, it's a sign that something is wrong.
Realistic offers
Standard market conditions: You should view offers that clearly stand out from the competition and are not standard market conditions with caution. Extremely low interest rates or particularly high loan amounts without collateral should be taken as a warning sign.
Appropriate credit check: Reputable providers carry out a thorough credit check and require the usual documents. Pawnshops are exempt from this, as you deposit the collateral there as security and therefore no further checks are required.
Legal documents and contracts
Written contracts: All conditions and contracts must be recorded in writing and should be available to you at all times.
Right of withdrawal: You can also recognize reputable providers by a reference to your right of withdrawal. Every reputable provider should have a withdrawal page on their website.
What payment options are available?
The payout options for loans often vary depending on the provider and type of loan. Below you will find the most common payout methods:
Transfer to the bank account
Direct transfer: This is the most common option. The loan amount is transferred directly to your specified bank account.
Instant bank transfer: There are several providers who can offer you an instant bank transfer.
Cash payment
Cash payouts are less common and are mainly offered in pawn shops. Due to the Money Laundering Act, the maximum payout amount is € 9,999.
Offsetting against existing liabilities
Debt rescheduling: With debt rescheduling, the loan amount can be used directly to pay off existing debts. In this case, you do not receive a direct amount of money, but your debts are simply paid off with the new loan.
Transfer to your PayPal account
Pay out: CASHY also offers you a transfer to your PayPal account as a payout option for your pawn loan.
What are the advantages and disadvantages depending on the type of loan?
Below we summarize the most important advantages and disadvantages in an overview.
Form of credit | Advantages | Disadvantages |
|---|---|---|
Consumer credit |
|
|
Mortgage loan |
|
|
Car loan |
|
|
Framework loan |
|
|
Installment loan: |
|
|
Credit card with installment facility |
|
|
pawn loan |
|
|
The most important questions and answers at a glance
What loan amounts and terms are possible?
The loan amount and term depend on your income, age and collateral. Amounts from € 10,000 to € 30,000 over 2 to 7 years are often possible.
Is collateral important for a loan?
Yes, collateral such as real estate or life insurance can increase the chances of obtaining a loan and offer better conditions.
How does a guarantee work?
A guarantor takes over the payment if you are unable to repay the loan. The guarantor must have a good credit rating and sufficient income.
Is a credit check always carried out?
Yes, the bank almost always checks your creditworthiness by means of a credit check to ensure that you can repay the loan.
What documents do I need for a loan?
You will need your identity card, pension certificate, bank statements and proof of additional income or collateral.
What fees should I expect to pay?
Fees can include interest, processing fees, account management fees and early repayment penalties. The exact costs depend on the type of loan.
How do you recognize reputable providers?
Reputable providers are regulated, have clear conditions, good customer service, positive reviews and do not require advance payments.
What payment options are available?
Credit amounts can be transferred to your bank account, paid out in cash or provided by check or prepaid card.
Is an immediate commitment possible?
Yes, many online banks and fintech companies offer instant approvals where you can find out immediately whether your loan has been approved.
Are there other forms of credit where you remain debt-free like with a pawn loan?
Yes, with pawn loans, reverse mortgages, leasing and factoring, there is no further debt as collateral is sold to cover the loan.
Are there alternatives to the options listed in the article?
If you already own a car that is not older than 12 years and has not exceeded a certain number of kilometers, you can also take out a car loan for it.
You should now have an overview of your options for loans as a pensioner. Please note that the figures and data provided are snapshots and are no substitute for an up-to-date comparison.
All information without guarantee. Errors and omissions excepted.