Urgent financial requirements can occur at any age, even after retirement. To manage this sudden financial need, pensioners can opt for a pension loan. A pension loan is a personal loan that is specifically designed for retirees. It can be used for a variety of purposes in case of a medical emergency, marriage, and more.
A pension loan can only be acquired from the bank where your pension payment is deposited as the eligibility will be determined through the transactions from the monthly pension account.
The personal loan for pensioners is offered by banks with a maximum loan amount of ₹14 lakhs at low interest rates along with personalised repayment terms as compared to normal personal loans.
Before getting into the details, let’s go through the highlights of pension loans or personal loan for pensioners.
|Maximum Loan Amount
|0% - 5%
|Up to 84 months
|0 - ₹500
A critical aspect that impacts your financial decisions when taking a pension loan is the interest rate. The rates offered by banks and NBFCs will differ from one to another, however, the interest rates for emergency loans for pensioners are reasonable and low. Here is a general range of interest rates offered by lenders:
|8.45% - 40.00% p.a.
The equated monthly instalments are an important part of a pension loan that ensures a smooth and structured repayment plan. Taking into consideration the potential EMI that needs to be paid regularly will help make the repayment more manageable and predictable. Helping pensioners meet their financial requirements without compromising their budget.
Know the potential EMI to be repaid by calculating it based on the loan amount, interest rate, and tenure. You can easily calculate it using the online EMI calculator or by manual calculation.
In the online calculator, all you need to do is enter the loan amount, interest rate, and tenure. Using the online EMI calculator is advantageous as it is accurate and free from unnecessary errors.
You can also calculate the EMI manually by using the formula:
EMI=P x r(1+r)n/(1+r)n- 1
EMI is the equated monthly instalments.
P is the loan amount.
r is the interest rate.
n is the tenure.
There are certain eligibility criteria that a pensioner must meet to qualify for a pension loan. These criteria will vary depending on the lenders and their loan policies. However, here is a general overview of what lenders are expecting:
|21 - 76 years
|Minimum pension amount
|₹15,000 or more
|Minimum credit score
Moreover, any pensioner who is drawing a pension from a specific bank is eligible for a pension loan from that bank. Some lenders also offerloans for pensioners based on the following criteria:
Defence pensioners: If you are a pensioner of the Indian Army, Navy or Air Force, you are eligible for a pension loan with the maximum amount of up to 20 times their monthly pension payment.
Family pensioners: Any family member who has been authorised to receive the pension after the death of the original pensioner is eligible for a pension loan.
Not sure of your credit score? You can find out for free!
Quick and easy loans for pensioners require certain documents that will help lenders ensure that specific requirements are met. Understanding what documents to submit will help ensure a smooth application process and shorten the loan processing time. The documents required are:
Identity Proof: Aadhaar card, Voter ID, PAN card, Driver’s licence or Passport
Pension payment proof: Pension payment order, pension account statement.
Address proof: Utility bills, Aadhaar card, Voter ID or Passport.
Getting a pension loan after retirement requires careful consideration and awareness of loan terms and features. To choose the right pension loan, consider the following tips:
Access your financial requirements: Before applying for a loan, remember to clearly define your need for a pension loan. Whether it is for medical reasons, home renovation, or weddings. This will help you accurately estimate the loan amount you need to take without putting undue strain on your pension income.
Understand loan types: Explore various loan types available to pensioners, and understand which loan can give you the best terms at the lowest interest rates.
Evaluate your pension income: Ensure that the loan amount and repayment will fit comfortably within your pension budget.
Research lenders: Compare the different rates and terms offered by different lenders. Choose a reputable lender with transparent terms and fair interest rates.
Interest and charges: Check for competitive interest rates and any additional fees and charges associated with the loan. Compare the overall cost of borrowing from different lenders to get the most favorable loan terms.
Tenure: Ensure to choose a repayment tenure that suits your financial situation. Pick a tenure that is neither too long nor too short.
Government schemes: Explore government-backed pensioner loan schemes if any are available as they can provide more favourable terms that are designed to support retirees.
Ready to take the next step?
Making a comparison between different pension loan providers will help you evaluate the different interest rates, tenures, and loan amounts. Ensuring you get the right lender with the best loan terms. Below are the different lenders offering pension loans along with their interest rates:
|Interest rate (p.a.)
|State Bank of India
|11.05% - 14.05% p.a.
|10.50% - 21.00% p.a.
|SMFG India Credit
|11.99% - 36.00% p.a.
|11.75% p.a. onwards
|Bank of India
|10.50% p.a. onwards
|11.15% - 11.40% p.a.
|Bank of Baroda
|10.00% - 11.65% p.a.
|Punjab National Bank
|IDFC First Bank
|10.75% p.a onwards
|10.65% p.a. onwards
Read LessNote: These rates are indicative and subject to change. Always check with the bank for the most up-to-date information before making any investment decisions.
Applying for a pension loan is a straightforward process. Just follow the steps below:
Step 1: Choose your preferred lender and visit their website.
Step 2: Select the ‘Personal loan’ option, choose ‘Pension loan’, then click ‘Apply Now’.
Step 3: Enter all the necessary information.
Step 4: Upload supporting documents
Step 5: Submit the application.
Step 6: Verification process will be completed.
Step 7: Once approved, you will receive the loan amount.
The easiest way to get a pension loan is to apply for a personal loan as a pensioner. There would be no need of any security and as per your eligibility you can get a desired loan based on your needs.
Buddy Loan has a pool of RBI approved lenders to facilitate your loan journey. Check the steps below to apply for a quick personal loan and get instant cash in your bank account:
Step 2: Open the Personal Loan Application Page.
Step 3: Provide your mobile number and enter the OTP received.
Step 4: Enter the amount you wish to borrow.
Step 5: Provide your personal email.
Step 6: Select ‘Personal Loan’
Step 7: Enter your Date of Birth, Gender, Highest Qualification, PAN Number, First Name, and Last Name.
Step 8: Specify your residence type, Years at the current address, and your address Pin Code.
Step 9: Click ‘Submit’ to send your personal loan application.
Take the next step!
Financial stability is crucial after retirement, however, pensioners can often find themselves in need of urgent financial assistance. Exploring various schemes that are offering loan facilities designed especially for them can help to bridge the gap between immediate financial requirements and financial stability. Apart from pension loans, other schemes such as loans against fixed deposits can also offer financial benefits.
Comparing the two options can shed light on the features and benefits each one provides, helping pensioners get the best terms available for them.
|Loan against FD
|Nature of the loan
|Get a loan by leveraging your future pension income.
|Get a loan with your FD as collateral.
|You must draw a pension from the same bank you’re getting the loan.
|You must hold an FD with the same bank you’re taking the loan from.
|Up to 14 lakhs or based on pension amount.
|Up to 90% - 95% of FD amount.
|10.00% - 36.00%*
|1% - 7% above FD rate*
|Up to 84 months
|Before maturity of FD.
|No credit score requirement.
|Security and collateral
|0% - 5% of outstanding amount.
|Flexibility in usage
|No restrictions on usage.
|No restriction on usage.
|Impact on income
|May impact future pension income.
|Will preserve pension payments.
Read Less* Note: These rates are indicative and subject to change. Always check with the bank for the most up-to-date information before making any investment decisions.
Choosing between taking a pension loan or a loan against FD will depend on your individual financial goals, needs, and preferences. While personal loans for pensioners offer quick access to future income, loan against FD offers access to immediate financial requirements while maintaining the integrity of long-term investment. Consider each option carefully to make the right choice according to your needs.
Take the next step!
A pension loan is a loan you can get based on your pension income. It provides instant cash access at low interest rates and flexible repayment options.
Yes, you can obtain a loan based on your pension income from the same bank that you are drawing your pension payment from.
Almost all popular banks and NBFCs practice pension lending.
Yes, you can use the loan for any purpose. There are no restrictions on its use.
You will need an aadhaar card, voter ID, PAN card, driver’s licence, passport, utility bills, pension payment order and pension account statement.
A higher pension amount and longer duration may increase your chance for loan approval and will lead to more favourable terms.
Defaulting on a pension loan may result in penalties, legal action and potential impact on future pension disbursements.
Yes, alternatives include personal loan, government schemes like Senior Citizen Savings Scheme, Pradhan Mantri Vaya Vadana Yojana, loan against FD, loan against property, etc.
Yes, you can use the loan for any retirement expenses, healthcare, travel and more.
To ensure responsible use of the loan amount and repayment, you will need to create a budget, use the funds only for the intended purpose, prioritise high interest debts and adhere to repayment terms.
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