Best loan alternatives for seniors
As Grammy Award-winning singer Alan Jackson said, “The older I get, the better off I am.” But is this the case for the elderly around us?
According to CNBC, a 2018 survey found that one in seven bankruptcy filers in the United States are age 65 or older. A recent report on the quarterly state of household credit and debt also revealed that from 1999 to 2022, the total debt balance of Americans aged 60 to 69 increased by 623.3% (% ), going from 0.38 trillion to 2.38 trillion (in dollars). This sharp increase over the past two decades has left a bad taste in the mouths of economic pundits and financial analysts.
Some might wonder why there is such a volume of seniors seeking loans. As much as young adults, Millennials, and Gen Z have needs, so do older people. They have dreams and aspirations they still hope to achieve, bills and taxes to pay, and other expenses.
With the pension fund system constantly derailed, most seniors often have no choice but to apply for bank loans. These loans come with a burden as they are tedious to repay.
Before you decide to go to a bank for a loan as a senior, here are some loan alternatives to consider. They are much easier to acquire and less stressful to repay.
This is one of the fastest ways to get fast loans as a senior. Pawnbrokers are designed to help you borrow money in exchange for the temporary loss of possession of a valuable item. These items are returned after meeting refund requirements.
Pawnbrokers inspect the item(s) to be pawned and then estimate its monetary value based on the market value of similar items. The corresponding money is then rented to the owner of the items after presentation of a means of identification or proof of ownership. The pawnbroker is, however, authorized to resell these items in the event of default.
Items eligible for pawning range from jewelry, artifacts, household items or even gadgets.
This is another common way for seniors to get by when they are short on money. It can be hard to give up some of the things we hold dear, but it’s still a much better alternative to taking out a loan that you might not be able to repay in the near future.
You can save old family heirlooms or heirlooms that have so much sentimental value in the form of photos and then sell them instead of applying for a bank or a payday loan.
It involves borrowing against the value of your home’s equity. This is one of the safest ways to get money for seniors who own FHA-approved homes or condos. Some eligibility criteria include:
● You must be 62 or older to apply
● You must reside in the home to be used for at least six months and one day in the year.
● The house or condo must be FHA approved.
● You cannot borrow more than the value of your home.
If you meet these conditions, you are eligible to be paid a particular percentage (usually between 35 and 70%) of the value of your home on demand. This differs from the outright mortgage, which requires a monthly repayment plan.
In most reverse mortgage cases, the lending institution would then take on the responsibility of selling the home to pay off the loan after the borrower is late or has left the home.
To check the value of your property, you will need a reverse mortgage calculator. This calculator takes the value of your property, as well as the current value of any mortgage you have left to pay on the property, and gives you an estimated value that you are likely to earn as a loan.
This is the best way to ensure that seniors receive loans without losing their residence to banks or other lending institutions during their lifetime.
Family or friends loan
Visiting immediate family or friends can be helpful in times of financial need. It’s always a better option than locking yourself into an endless cycle of payday or bank loans. As difficult as it may be, it would save you a lot more stress and embarrassment in the long run.
Let them know you’re serious about it by writing up a repayment agreement that would eventually help you repay the money.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.