Tuesday, February 28, 2012

Find Out If Pensioner Loans Are For You

By Sam Goodson


With today's financial crisis, most people would have to tighten up their spending and look for other resources in order to survive. These times are especially difficult for people who are already in their golden years and are depending on their pensions to survive. Others, however are creative enough to look for other means to provide for their needs, such as applying for pensioner loans.

Your pension fund can actually be used as a collateral for a loan. You can then use the loan proceeds for any financial need that you have. For instance, you may need to pay off a mortgage, revive a business, send a child to college or pay for hospital bills.

There are several financing companies that offer loans against your pension savings. What makes it easy for you to apply for one is that there is often no credit check required. Lenders are just keen on knowing whether you do have a substantial pension fund that they can collect from in case you fail to repay the money you owe.

Oftentimes, you would have to prove that your pension has about $15,000-50,000 value. Pensioner loans may be paid back within 5- 10 years. You will not be charged penalties if you decide to pay off the loan earlier. Financing companies offering this type of loan charges different interest rates, so be sure to do your research first and compare in order to get the best rates.

A bad credit record will not disqualify you from a pension loan. Most lenders would not even require any proof that you have a source of income. The processing time takes about a few weeks and a loan officer would assist you in completing the documents.

The best thing about these loans is that you may even avail of them even if your credit rating is low. Remember that every time a potential lender does a credit check on you, your credit score may be affected. Since pension loans are not registered with credit agencies, the lender will no longer need to do a credit check on you.

Some pension funds do offer pensioner loans, so check with your provider first before you talk to other financing companies. It is now possible to apply online, but be sure to make your due diligence first before signing up for a loan. You may also get a free assessment that will tell you how much you can borrow, how long you have to repay the loan and how much interest would you have to pay.

Pensioner loans are different from "pension release schemes" where you only get a proportion of your anticipated fund value. Recently, there are many companies who are actually offering advances against pensions that do not need to be repaid. There are many unscrupulous businesses that may take advantage of people in financial need and may mislead them into thinking that these are legitimate loan offers.

Therefore, be careful when applying for pensioner loans and seek the help of a qualified financial advisor. Do not make hasty decisions but instead, consider all the pros and cons of the loan offer. Remember that if it sounds too good to be true, it usually is.




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