In principle, pensioners also get a loan if they can meet special requirements imposed by the banks. Banks often prescribe a maximum age, which can be between 55 and 75 years. Other credit institutions require that the loan be repaid before retirement. Then there are also banks that are not as strict with their requirements and do not require a lot of collateral.
Every bank demands a fixed, regular income, in this case the pension payment. For example, the applicant must submit his pension notification so that the bank can see how high the pension is every month. The pension payment ends when the borrower dies, which many banks regard as a problem. For example, retirees who are older than 75 years rarely get a car loan for retirees. They fear that the risk of default will be too high and that the loan cannot be repaid in time.
Guarantees facilitate approval
All banks require collateral, including a car loan for retirees. The guarantor is scrutinized and must be able to repay the loan if the actual borrower cannot. A good credit rating and a regular income are prerequisites for a guarantee. It is also possible to enter the guarantor in the will so that the guarantor is secured. Should the guarantor have to pay back the car loan for pensioners, he can sell the vehicle and use the proceeds to redeem the loan. Another alternative to a guarantor is to take out residual debt insurance.
This insurance is used when the borrower dies, so that the insurance covers all liabilities. However, this alternative can often only be used by borrowers who are not older than 65 years. The borrower himself can significantly increase his chances of getting a car loan for retirees if he can make a down payment for the vehicle himself. This deposit should be 30 percent of the purchase price. With this collateral that can be provided, the bank takes little risk and will typically approve a loan application.
Car Loan for Pensioners Conclusion
If the pension payment is high enough and there is also sufficient collateral, a car loan for pensioners is easily granted. Without collateral, such as a guarantor or residual debt insurance, very few banks will approve a loan application. With a little initiative, a cheap bank can be found where a loan application can be made.