Legally, there is no age limit for taking out a bank loan. However, the theory is far from reality since once the borrower has reached a certain age, the banks become reluctant to grant him credits. They do so only under certain conditions which do not always benefit policyholders.
Chilly banks face senior borrowers
Unfortunately, not all customers in banking establishments are treated equally. In fact, they are much more flexible towards those in their thirties or forties who are still professionally active rather than with retirees in their sixties whose incomes have fallen. Income precisely constitutes an elementary detail in access to credit.
But not only since health also plays a big role. By engaging with a senior, the chances of non-reimbursement are high, especially if there is a lot of medical history.
However, not all is lost. The favorable figures on the extension of life expectancy are making a difference. Banks must readjust their policy on finance for seniors and be more conciliatory towards them.
So, today, customers under the age of 65 can aspire to get credit. Still it must not be long lasting. Difficult indeed for a person of such an age to repay monthly payments spanning very many years, how much even he has very solid health, without heavy medical history.
Health has a huge impact on the cost of credit. It may be that the borrower is penalized by insurers through an insurance contract which is very expensive. This is even more true for people who are no longer in shape. Just for comparison, if insurance is 0.20 to 0.30% of the total cost of credit for young workers, it is almost double for older borrowers (see here). People over 70 even have to pay up to 1.75%. Financial institutions apply this additional cost because the risk of death before final repayment is high.
How to get a loan when you are a senior?
Seniors can use some of their strengths to attract banks and access a loan. Personal contribution for example. The latter is required from financial organizations. But young people are sometimes unable to provide this financial contribution. Seniors, on the other hand, have had plenty of time to save and can thus pay for their personal contribution.
Personal collateral is another option to consider. Already owner, you want to acquire a second home? Use your first asset as collateral. This will reassure the borrower at the time of subscription. However, if you fail to repay your loan, you risk losing your home. Weigh the pros and cons before you start.
And if despite all these tips and tricks, the bank has closed its doors for you. Try to ask for the senior contracts that have been specially set up for people 80 and over.