5 Ways to Avail a Personal Loan When You Are 50
It is a common understanding that banks, as well as lenders, are unwilling to offer loans to people who are 45 years of age or above. While this was true to some extent in the past, many banks offer loans to people that are older too. In some cases, the amount of credit is often confined between 12 and 18 times the pension, that the borrower is slated to receive after retirement. However, this amount may change depending upon the sources of income of the borrower as well as the credit history of the co-borrower. Before we go ahead to understand how you can avail a reasonable loan amount, let us first take a look at why banks may be hesitant to offer you a hefty loan, to begin with.
Ability to Repay
When you are 50 or above, the better part of your employable years are behind you, and your retirement is lurking over. With retirement, you are solely dependent on your pension, which implies a decline in your monthly income. This may sometimes put you under an increased financial burden and adversely affect your ability to repay the loan.
As you age, you become more susceptible to illnesses, and your expected lifespan shortens by the day. It is for this reason that most lenders see it is as a risk to offer loans to older adults.
Contrary to popular belief, your living expenses tend to go up with age. With a comparatively lower income and increased healthcare expenses to take care of, the chances are that you may not be in a strong financial position to repay your loan on time.
That being said, you can count on some of the leading banks of the nation to offer you a Personal Loan so that you can conveniently fulfil one or more of financial obligations that come your way.
How to Avail a Personal Loan?
Below mentioned are certain aspects which can work in your favour, and help you Get a Personal Loan Approval.
1. Source of Income
In order to offer ample proof to the bank regarding your ability to repay the loan, it is essential that you mention your source as well as the quantum of income. If you are a salaried individual working for a reputed organisation, the chances are that you can apply for a higher loan amount owing to the stability of your income. However, if you are a self-employed individual, you can increase your chances of getting approval by showcasing your income tax returns for the past 2-3 years. Remember, the more stable your source of income, the more trust will the bank place in your ability to repay.
2. Debt Consolidation
In most cases, banks would not be willing to offer you a loan if you already have a substantial loan amount under your name. Hence, if you are planning to apply for a new personal loan, you should first close off all your existing loans, and clear your outstanding credit card bills. This will increase your loan eligibility.
3. Credit Score
Having a credit score equivalent to or higher than 750 is considered reasonable by the lenders, and will exceptionally increase your chances of getting the loan. If you have a rating lower than this, then you must look for ways to build a better score before filing your Personal Loan application.
If you can arrange, add a co-borrower for the loan, who is younger than you and enjoys a reasonably good credit score. To this end, you can ask your spouse (if younger), your children, or sibling, and even friends. While the bank may take its time to scrutinise your relationship with the co-borrower, but once established, this will considerably increase your chances of getting an approval.
As mentioned earlier, banks see aged borrowers as a risky proposition. To turn this aspect in your favour, you need to opt for a shorter tenure of say, 3 or 4 years. This will assure the bank of repayment.
Now that you know, how to avail a Personal Loan in your 50s, make sure you understand that taking credit only makes sense if it is absolutely necessary. A hefty investment will not only impact the quality of your life in the long run but can also add to the financial burden of your heirs!
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