Tuesday, January 14, 2014

Can You Get a Car Loan If You Are Retired?

If you're a retiree and are wondering if you can borrow money for a car, this helpful guide will answer your questions. Though retirees are no longer working, you could have a leg up when choosing the right car loan.

Retirees own more assets and have less debt

Retirees are people that have worked all their life. They usually have high equity a home, or have completely paid off a mortgage. Having collateral like this means retirees can qualify for a loan and in some cases, lower interest rates.

A good credit history

Having a good credit history also increases your chances of not only securing a loan, but getting one at a lower interest rate. It makes sense to check your credit history to fix any mistakes.

Income beyond work

A lender usually asks prospective borrowers for their proof of income. This really means proof you have a stable job. Many retirees have alternative forms of income. They tend to have significant savings and/or superannuation packages. Some retirees have stock or property portfolios that provide a part of their income. This proves they have the funds necessary to pay back a loan.

Age can be a factor

Typically, five-year loan terms aren't a problem for financial institutions lending to retirees. They may offer 36 to 24 month loan terms if age is a factor. If you have significant savings, you can opt to put a larger deposit on the car, which reduces your monthly repayments further.

Find out what's right for you

Remember; it pays to find out what's out there. Don't apply for too many loans, as it will reflect negatively on your credit history. Consult a financial professional to help choose the most manageable and affordable car loan for you.

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