Most of us need to borrow money at one time or another. It is even true for people who are older and maybe retired. Even if you have planned your retirement well, you might not want to dig too deep into your savings if a loan can serve the same purpose.
However, the idea of borrowing can be stressful for older people. They might think that there are not as many options out there. They might also think lenders will be reluctant due to their age or the fact that they no longer work.
While these feelings are understandable, you might not need to worry as much as you think. Whether you need money to remodel your bathroom or buy a new car, there is probably a lending product out there for you.
Your standard loan from a bank or credit union is a great place to start. If you have good credit and reliable income, it should not be that hard to get approval. Conventional bank loans also tend to come with reasonable interest and fees.
Part of what makes these loans such a great option is that they can cover almost anything. You could use it to pay for a new car, home repairs, or debt consolidation. The way you use the money is up to you. The lender’s only concern is that you have the means to make payments.
Some older people choose to buy new houses. Whether you are retired or about to retire, this could be a good idea. For example, you might choose to move to a home better suited to older people. A lender’s primary concern when issuing a mortgage to an older person is income. However, as long as you can show that you have reliable income and decent savings, it shouldn’t be a problem.
A reverse mortgage could be an option for homeowners over 62. With this option, you are taking a loan against a home you already own. The money can be paid in a lump sum or as monthly payments. The best part is that you do not need to pay it back until you sell the home.
However, you need to take your time when selecting a reverse mortgage. For example, let’s say you live in Texas and want a reverse mortgage. You would start by making a list of reverse mortgage lenders in TX. You could then compare their offerings and terms. Once you have a shorter list of suitable lenders, you could contact a few to discuss the options they offer.
Home Equity Loans
Home equity loans offer another way to borrow against the home you own. Once you have enough equity built up in a home, you can use it as collateral for a loan. It can be a great way to borrow because home equity loans often have interest rates much lower than other loans. However, unlike a reverse mortgage, you will need to make monthly payments. A home equity line of credit could be another option for a form of rotating credit.
For many people, credit cards are their first option when they need extra money in a hurry. It is money available to borrow at any moment. If you are an older person, there is a good chance you already have at least one credit card.
Credit cards can be a good option since they offer readily available funds. With that said, the interest and fees usually make them less favorable than many other borrowing options. If it is a low amount and you think you can have it paid during the billing period, it might not be a bad idea. You just want to avoid having a running balance subject to high interest.
Whether you are working or not, having a vehicle is important for most older people. Along with the ability to handle your basic errands, a car provides a level of independence that is hard to maintain without one. Just like with most other loans on this list, you should be able to get an auto loan as long as you can prove reliable income.
There are many different types of short-term loans. You may have heard of payday loans or title loans. With a payday loan, you borrow with the understanding that you will pay the money back the next time you get paid. Most short-term lenders will issue this type of loan even if you are retired.
With that said, you need to be careful. Most short-term loans are considered forms of predatory lending. They come with high interest and excessive fees. Many of these lending products are designed to keep borrowers trapped in a cycle of paying and renewing debt.
These are a few of the options older people have for borrowing money. Before taking any debt, you should consider your needs to find the best type of loan. Once you know the best type of loan for your needs, compare the offerings from several lenders.