Your Pension Can Get You a Loan

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Published: 22nd December 2010
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The intent of writing this is to increase awareness among people about loans for pensioners. I just got to know recently about these loans and felt relieved that there are loans and schemes that take care of the senior citizens keeping in mind their financial capabilities and needs. A neighbor of mine who is 70 years old had to undergo a surgery urgently and could not contact his children who were traveling. He was getting the paper work ready to apply for a loan when I spoke to him and it was through him that I learn about loans for pensioners.

Pension loans are given to senior citizens who are receiving pensions as a monthly payment. The pensions are considered as the income and loans are given though their income may not be high. Such loans help the elderly in times of need or crisis. The loans can be used for anything ranging from medical expenses to renovation / furnishing / repairing a self-occupied home, to enlist them into a shelter for aged people, to buy jewelery or for the marriage of their children, to travel or for purchase of a good /service.

Banks differ in their terms and conditions and so you should contact various banks and do a bit of a research to settle down with a bank or financial institution which will give you maximum advantage and where the terms are relaxed. Most banks restrict the age limit to avail these loans to 70 years. A couple of banks may stretch this to 72 years. Also, there is a minimum amount of health expectations from the banks such as you should be mentally stable and not be bed-ridden by any illness. You must be a pensioner to avail the loan in your name. The loan amount, your pension amount, your age will all be taken into account by the banks to decide the loan tenure (which usually does not exceed 10 years) and the interest rate that will be deducted from your pension amount every month. Banks usually give pension loans that are 7 to 10 times the amount of the last pension that you received.

Banks giving you the loan may expect and ensure you have the account where you receive your pension with the same bank. Security deposit is expected by the banks which can be done by pledging your NSCs, LIC Policies, KVP, Relief bonds and Bank’s own Term Deposit papers, your home or land that you own. The banks are considerate of the economic condition of the senior citizens and hence waive off the processing fee and other such expenses.

Documents that will be required to avail pension loan:

• Identity proof (a photocopy of your Passport / Voters ID card / Driving License)

• Residence proof (a photocopy of your Passport / Telephone bill in your name / Ration card / Electricity bill)

• Retirement proof (letter from the organization you worked for / pension slips)

• Bank statement (updated 6 months transaction statement, preferably of the bank where you have your pension account)

Good can come out of these pension loans only when awareness about these loans spreads and people make use of this economic independence in their old age too.

Dev Kumar is a financial adviser and an expert author, has 8 years of experience in writing finance related topics. He has written articles about Personal loans, Business loans,Home loans.

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