After retirement, many people find themselves with a limited income source in the form of a fixed pension, while some are left to survive only on their savings and government benefits. If you belong to this age bracket, then you are probably aware of the various challenges pensioners face when it comes to managing personal finances, especially in the face of an emergency.
While most loan products available in Australia require borrowers to be employed with a regular income, some lenders offer pensioner loans for those who are retired and living on a pension.
Cash Loans For Pensioners Options
The following loan options are available to those borrowers who are currently earning a pension as their only source of income. However, your pension type and current financial circumstances will determine whether you are eligible for a pensioner loan.
Loan From Your Bank
Your bank is likely to approve a loan for you as a pensioner if you have maintained a good relationship and credit history with it for a significant period of time. Paying a visit to your local bank branch should help you discover the loan options available for you.
Tip: Borrowing from a bank may also be the cheapest option compared to loan products being offered by other lenders in Australia.
A reverse mortgage can be a very useful loan option for those borrowers above the retirement age who are cash-strapped yet hold valuable property. This option does not require borrowers to have an income as there are no regular repayments on the loan amount. The loan is settled after the property is liquidated when the borrower ceases to use it. However, fees and interest charges are still applicable on the loan, so make sure you are able to pay these before signing the reverse mortgage agreement.
Short Term Loans
Short term loan providers are willing to provide small loans of under $2,000 for borrowers with low income, even if they are unemployed and the income is coming from pension benefits. Usually, these loans come with a repayment term period of between 16 days to 1 year depending upon the loan amount and lender terms.
Most lenders will conduct an affordability assessment to ensure you can afford the loan. However, these loans are among the most expensive credit options available in the market and should only be considered as a last resort and to pay for unavoidable expenses. Interest rate charges can be as high as 48% per annum, and you may also be expected to pay a 20% upfront fee.
Options Assisted By The Australian Government
There are a few loan programs funded by the Australian government for pensioners. In case you are unable to find a suitable loan product from private lenders, these options can offer the necessary assistance.
- Pensioner Loan Scheme – this scheme has been designed for people who have reached the pension age but are still not eligible for Age Pension because they hold sufficient assets or have other income sources. By using the scheme, pensioners can derive a loan amount against the capital that is tied up in personally-owned assets. The scheme usually requires borrowers to repay the loan in fortnightly payments and allows borrowing of up to the maximum amount as allowed under the Age Pension.
- No Interest Loan Scheme (NILS) – borrowers that have low income can take out a loan under the NIL Scheme of as much as $1,200, to be repaid over a period of 12-18 months. To be eligible for the loan, you are required to have a pension card, and also use the loan to pay for personal expenses such as the purchase of household items, payment of medical expenses, or to get your car repaired, among others.
- Cash Advance Through Centrelink – if you are a recipient of Centrelink pension payments on a regular basis, then you may be eligible to get an advance payout on one of these payments. This advance is adjusted against future payouts, so make sure you have a coping mechanism to deal with a proportional deduction in the future. Your eligibility for an advance depends on a few factors, including the pension payment type, the time period you have been receiving such payments, and the amount that is disbursed to you as a pension payment.
Community Programs For Financial Assistance
The following programs are great for pensioners to boost their personal finances.
- AddsUP – the AddsUP program, through its matched savings plan, allows savers to receive a dollar by the bank for every dollar they save above $300. The maximum amount that will be matched is $500. Only those who have successfully repaid a StepUP or NILS loan in the past are eligible for this scheme.
- Good Money – this is a community finance platform that can help you gain access to personal loans that carry a very low or no interest rate. The program also aims to help people with better management of personal finances.
- NAB StepUP Program – these personal loans are available for pensioners between the amounts of $800-$3,000. A very low-interest rate is applicable on these loans, and no other fees and charges are applied to make them affordable. StepUP loans can be used to pay for essential household purchases.
How can I apply for a pensioner payday loan?
To apply for a personal loan as a pensioner, simply visit our application form. Many lenders will also allow you to apply online, so make sure to check their website for the online application form.
What are the eligibility criteria to apply for the Pension Loans Scheme?
The eligibility criteria for the Pension Loans Scheme requires that applicants must:
- Be of Age Pension age, or have a partner of that age
- Be receiving a qualifying pension, or be eligible for one
- Have real estate with adequate insurance in Australia under their ownership, or under their partner’s ownership, to be used as security
- Not be bankrupt or ever have been subjected to a personal agreement of insolvency
What are the qualifying pensions for the Pension Loans Scheme?
The qualifying pensions are Age Pension, Carer Payment, and Disability Support Pension.
Which banks and lenders in Australia accept pensioners for a loan?
There are many lenders and banks in Australia that offer loans to pensioners, provided certain conditions are met. These include Cash Converters, Cash Stop, Ferratum Loans, Credit24, Rapid Finance, ANZ, BankSA, Citibank, NAB, St. George, and Westpac, to name a few.