Personal loans for pensioners (2023)

Almost everyone needs to borrow money once in a while. People on a pension are no exception. But if you are on an Age Pension, a Disability Support Pension (DSP) or a Carer Allowance, your options for a personal loan are somewhat limited. If you have no assets to offer as security for the loan, and if your credit score is poor, this becomes even more difficult.

We have done the research on personal loans for pensioners, what the risks are, and share some other alternatives you may want to consider.

Can a pensioner get a personal loan?

Yes, but you should expect some banks to be reluctant to offer you a loan.

Non-bank lenders are more likely to approve applications from pensioners. Some lenders may expect you to have an income other than your pension from Centrelink. There are lenders who ask for over half (50%) of the income to be from a source other than Centrelink.

Can a pensioner with bad credit get a loan?

Yes. Even with a bad credit score in the 549 or below range, you may be able to take a personal loan while on any type of pension. However, the rates offered will be higher. Find out why here.

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How much can I borrow on a personal loan?

In general, expect traditional lenders to cap the loan amount at $2,000. However, in some cases, you may be approved for a loan up to $3,000.

If you have a long-term good relationship with your bank or if you have assets or savings to offer as security, you may be able to get a larger loan amount.


Taking on an additional financial commitment as a pensioner on a limited income carries a number of risks.

  • You could take on too much debt. Can you manage to make regular repayment instalments on your limited income? Could you cover groceries, rent, and other monthly bills on top of your loan repayment every month? If the answer is no, you are at risk of getting into financial difficulty in the future.
  • Interest rates may be higher. Risk-based pricing, which looks at various factors including credit score, income, and age, is increasingly common. This means that a prospective customer with a higher risk profile, i.e. a pensioner, pays more interest to offset the bank’s risk. If you have a good credit score and some assets to offer as collateral for your personal loan, you may be able to get lower rates of interest on your pensioner personal loan.
  • Fees could be higher. Another way lenders try to recoup potential future losses is by charging a high establishment fee on personal loans.
  • Extra documentation required. Lenders need documentation to prove claims made in any application, but will likely require additional proof from pensioner applicants, including:
    • Pension income
    • Proof of other income
    • Assets you own
    • Bank statements
    • Debts

If you think all that sounds rather invasive, it is. But that is how things work when you try to get a personal loan on a pension or other limited income.


A personal loan may not be the most desirable and affordable way to access additional funds when you are on a pension. The following alternatives carry varying levels of risk.

Pension Loan Schemes (PLS)

People of pension age, who are eligible to get or are already on an Age pension, can apply for Pension Loan Schemes. These are paid as fortnightly payments, not a lump sum.

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You need to repay the loan amount together with some legal costs and interest accrued on the loan. How much you can get depends on your pension rate. The loan amount cannot exceed 1.5 times (150%) of your maximum pension rate.

To be eligible, you or your partner must own Australian real estate with appropriate insurance that can be used as security. People who are subject to a personal insolvency agreement or are bankrupt are not eligible for PLS.

No Interest Loans Scheme (NILS)

Loans provided through the No Interest Loans Scheme are subsidised by the government. They are free of interest, fees, or charges. That means you only have to repay the same amount that you borrow.

To be eligible, you need a Health Care Card or a Pension Card and are earning less than $45,000 a year. You need to have lived at your current or last address for at least 3 months.

You can borrow up to $1,500 for between 12 to 18 months. A NILS loan can be used to pay for car repairs, medical and dental bills, and to buy essential items like home appliances or a laptop and text books for educational purposes. They cannot be used to pay for food, other bills, rent, debt repayment or for other living expenses.

You can access NILS via 170 local community organisations spread across 600 locations around Australia.

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Centrelink Cash Advances

This is an option if you get regular payments from Centrelink. Remember that this service just enables you to draw on the money you get as an advance and is not in addition to your pension amount.

Eligibility depends on how long you have been with Centrelink as well as how much you get and the type of payment. People who have been getting an Age Pension, Carer Payment, Disability Support Pension, Farm Household Allowance, JobSeeker Payment, Parenting Payment, Widow Allowance or Youth Allowance for job seekers for at least 3 months are eligible to apply. There are also limitations on who can get Centrelink cash advances and for how long. Find out more at Services Australia.

Bank account overdraft

There are several key differences between a personal loan and using a bank account overdraft.

You need to get approval from your bank for an overdraft on your transaction account before you can use the funds.

The good thing is that you only have to pay interest on the overdraft amount, once fees and charges are paid for. This is an option for when bills are due but you know you will be short on cash for a while.

Redraw from home loan

A home loan redraw facility works by letting you withdraw any extra repayments that you have made over and above the required minimum repayments on a home loan.

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You can even consider a home loan redraw facility as a place to park your extra savings. When you do this, instead of earning interest like a savings account does, it effectively reduces the interest you need to pay on your home loan. Any additional repayments that you make on the home loan go towards boosting your 'available redraw', which you can draw on whenever you need some extra cash.

Reverse mortgage

A reverse mortgage works by letting you borrow money using the equity in your home as the security. People over the age of 60 can borrow up to 15–20% of the home value. This amount increases as you grow older.

As a rule of thumb, add a 1% for each year of your age over 60. If you are 65 you can borrow about 20 - 25% of the value of your home as a reverse mortgage.

What you draw on a reverse mortgage is not counted as a type of income, and should not affect your pension.


Now that you are aware of the pros and cons of personal loans for pensioners and what other alternatives you have to get some extra cash for your needs, carefully consider your options before making a final decision.


Personal loans for pensioners? ›

As long as you have a steady source of income — whether through assets, a part-time job, disability or retirement benefits — you may qualify for a loan.

Can a retired person apply for personal loan? ›

As long as you have a steady source of income — whether through assets, a part-time job, disability or retirement benefits — you may qualify for a loan.

Do banks give loans to senior citizens? ›

Senior citizens can get mortgage loans just like everyone else – it all depends on income, credit score, and cash available. Even seniors into their 90s can get mortgages if they qualify financially. There are varying reasons for wanting a mortgage.

What is a hardship personal loan? ›

A hardship loan doesn't have an official definition, but many personal finance institutions may offer their own version of hardship loans. At its core, a hardship loan is a loan that can help you get through unexpected financial challenges like unemployment, medical bills, or caregiving responsibilities.

Can I get a personal loan at age 75? ›

A lender generally can't deny your loan application or charge you higher interest rates or fees because of your age.

Is it hard to get a loan when retired? ›

Many retirees think they can't take out a loan—for a car, a home, or an emergency—because they no longer receive a salary. In fact, while it can be harder to qualify to borrow in retirement, it's far from impossible.

Can a person on Social Security get a personal loan? ›

Fortunately, lenders accept most forms of income, including Social Security benefits, when considering loan applications.

What is the loan program that is for senior citizens called? ›

A reverse mortgage is a type of loan for homeowners aged 62 and older.

Can you get a loan if you are over 70? ›

Yes. There are a range of lenders who are willing to provide both secured and unsecured loans to pensioners over the ages of 60, 65, 70 and 75-80. As an older borrower there will be limitations on the loan term available. Benefit and pension income can be taken consideration if you are not in employment.

What are US senior loans? ›

Senior loans are debt securities typically used by companies to finance their operations, support business expansion, and refinance existing debt. They are known as “senior” loans due to their position atop of a borrowing company's capital structure.

What is the easiest government loan to get? ›

Common loan programs include: Stafford Loans: These are easy to qualify for, and you might receive interest subsidies. PLUS Loans: Parents can borrow substantial amounts, but that means parents will have to repay. 2.

What is the easiest installment loan to get approved for? ›

In general, the easiest type of installment loan to get will be a short-term personal loan that doesn't require a credit check, such as a payday loan, pawn shop loan or car title loan.

How much can you borrow with a hardship loan? ›

Key Takeaways. Hardship withdrawals are only allowed when there's an immediate and heavy financial need, and typically withdrawals are limited to the amount required to fill that need. Under regular IRS guidelines, you can borrow 50% of your vested account balance or $50,000, whichever is less, as a 401(k) loan.

Can a 70 year old get a 30 year loan? ›

Can a 70-year-old choose between a 15- and a 30-year mortgage? Absolutely. The Equal Credit Opportunity Act's protections extend to your mortgage term. Mortgage lenders can't deny you a specific loan term on the basis of age.

Can a 100 year old get a loan? ›

Key Takeaways. It is illegal for lenders to discriminate and deny credit based on age. Older applicants are treated the same as younger ones: They need a reasonable amount of home equity and must prove that they can afford the monthly payments. Just because you can borrow money doesn't mean that you should.

What is a strange but true free loan from Social Security? ›

The brief's key findings are: An unconventional strategy allows individuals to use early Social Security benefits like a “free loan,” paying back the principal while keeping the interest.

Do lenders only look at credit scores of those in retirement? ›

It is entirely possible for a retired person to get a mortgage to buy a home and lenders are not allowed to use age to make credit decisions. A loan application from any borrower generally will be evaluated for the same factors including income, debt, down payment and credit score.

Why can't I borrow from my retirement? ›

Some of the reasons why you can't borrow from your 401(k) include lack of spousal consent, you are nearing retirement, you have exhausted your 401(k) loan limit, you are no longer working for the employer, or if your job position is at risk due to ongoing restructuring.

How does a retirement loan work? ›

With a 401(k), an employee sets a percentage of their income to be automatically taken out of each paycheck and invested in their account. Participants can choose how to allocate their funds among the investment choices offered by the plan, which usually include a variety of mutual funds.

How do I get the $16728 Social Security bonus? ›

To acquire the full amount, you need to maximize your working life and begin collecting your check until age 70. Another way to maximize your check is by asking for a raise every two or three years. Moving companies throughout your career is another way to prove your worth, and generate more money.

What disqualifies you from getting a personal loan? ›

The most common reasons for rejection include a low credit score or bad credit history, a high debt-to-income ratio, unstable employment history, too low of income for the desired loan amount, or missing important information or paperwork within your application.

How to borrow money from Social Security? ›

Social Security will not give you a loan or let you borrow against your future benefits. You can't, for example, ask to borrow $5,000 and then simply have Social Security deduct that sum from your benefits once you start collecting them.

What happens to senior citizens who have no money? ›

Aging adults without money to support them through the rest of their lives can stay in a nursing home for up to 100 days—and Medicaid will cover the cost for this brief period. Seniors who reside in an assisted living facility and run out of funds will be evicted.

Why seniors should not worry about old debts? ›

Seniors enjoy protection from collection

Elders in California have a raft of legal protections from creditors. Exemption laws, pension law, and the Social Security Act often make it hard for creditors to seize the assets of elders, even to pay legitimate debts.

What is the name of the government program that provides cash benefits to senior citizens? ›

The SSI Program is a federally funded program which provides income support to eligible individuals who are aged 65 or older, blind or disabled.

Are there age limits for loans? ›

There is no maximum age limit for a borrower.

Is there an age limit for federal loan? ›

Is there an age limit for receiving federal student aid? No, there's no age limit. Almost everyone is eligible for some type of federal student aid. The adult student still needs to complete the FAFSA form, and make sure not to miss any deadlines, just like any other student.

Can a 70 year old get a 25 year mortgage? ›

Lenders have set the maximum age limit for a traditional mortgage to range from age 70 to a maximum of age 80. You can see how borrowers, aged 70, would be unable to secure a 25-year mortgage as they would be 95 years old when they were done paying off the loan.

Which loan is guaranteed by the government? ›

Which loans are guaranteed by the federal government? Government loans are usually not applied for directly from the government agency and are applied for through private lenders offering government-backed mortgages. The three most common federally funded loans are VA loans, USDA loans, and FHA loans.

What type of loan is guaranteed by the US government? ›

Backed by the Federal Housing Administration, FHA loans are mortgage loans with lower down payment and credit requirements, making them accessible to more people. To qualify for an FHA loan with Rocket Mortgage®, you must have a credit score of at least 580 and a 3.5% down payment.

Which type of loan is guaranteed by the government? ›

A government-backed mortgage is a loan insured by one of three federal government agencies: the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA) or the Department of Veterans Affairs (VA).

What is the hardest type of loan to get? ›

Unsecured loans are harder to obtain and interest rates can be higher, as lenders rely heavily on your credit and other financial information to determine your loan eligibility. The better your credit score, the better the interest rate you're likely to get.

How to get approved for a loan with bad or no credit? ›

How to get a loan with bad credit
  1. Check your credit score and credit reports. ...
  2. Make sure your monthly payment fits into your budget. ...
  3. Compare bad credit loans. ...
  4. Get prequalified. ...
  5. Look into secured loans. ...
  6. Add a co-signer if necessary. ...
  7. Gather financial documents. ...
  8. Be prepared for a hard credit check.
Apr 24, 2023

How to get a loan when struggling? ›

How to apply for hardship loans
  1. Check your credit score. Your credit score and report are the first indicators of your ability to repay your debt. ...
  2. Get prequalified with multiple lenders. ...
  3. Compare your loan offers. ...
  4. Formally apply with your preferred lender. ...
  5. Sign your closing documents.
Jan 26, 2022

What qualifies for a hardship withdrawal? ›

To be eligible for a hardship withdrawal, you must have an immediate and heavy financial need that cannot be fulfilled by any other reasonably available assets. This includes other liquid investments, savings, and other distributions you are eligible to take from your 401(k) plan.

Who is eligible for hardship withdrawal? ›

A 401(k) hardship withdrawal is allowed by the IRS if you have an "immediate and heavy financial need." The IRS lists the following as situations that might qualify for a 401(k) hardship withdrawal: Certain medical expenses. Burial or funeral costs. Costs related to purchasing a principal residence.

What is the average debt for 70 year old? ›

The Average Debt for Those 65-74

In a perfect world, you would be debt-free by the time you retire. That scenario is not realistic for many Americans, however. Householders in this age group who have debt carry an average debt of $105,250.

Do personal loans affect credit age? ›

Negative effects

A personal loan may lower the total age of your accounts and increase your credit utilization ratio – which can lower your score.

Can you get a mortgage with only Social Security disability income? ›

Yes, people on Social Security Disability Insurance (SSDI) or Supplemental Security Insurance (SSI) can use their benefits to help qualify for a home loan. Keep in mind that additional properties that aren't your place of residence are considered assets that could affect your SSI eligibility.

Can I loan my son $100 000? ›

The $100,000 De Minimis Exception

If the total sum of lending is less than $100,000, the IRS allows you to charge interest based on the lesser of either the AFR rate or the borrower's net investment income for the year. If their investment income was $1,000 or less, the IRS allows them to charge no interest.

What is the oldest year you can finance? ›

Typically, a bank won't finance any vehicle older than 10 years, even if you have good credit. If you don't have great credit, you may find it difficult to finance through a bank, even for a new car. But, banks are far from the last option when it comes to auto lending.

Can senior citizens get a personal loan? ›

Your age doesn't have to be a drawback when applying for a personal loan. Loan providers consider senior applicants based on the same factors they use for all borrowers: income, debts, and credit history.

What is a ghost loan? ›

Ghost loans are the ones that are fake loans documented in the loan books and exist only on paper.

What is a secret loan? ›

Secret loan project is aimed to provide lending for small structured debt that have fixed interest and can interact using stablecoins using ACH relationships and aggregating POS loans.

What is social loan? ›

A social-loan market is where loans are issued to fund projects that further a social cause. These loans can help finance an environmental or social-welfare project, among others. Lenders in this market are varied, including banks, non-banking financial companies (NBFCs) and fintech lenders.

What retirement accounts can I take a loan from? ›

Profit-sharing, money purchase, 401(k), 403(b) and 457(b) plans may offer loans. To determine if a plan offers loans, check with the plan sponsor or the Summary Plan Description. IRAs and IRA-based plans (SEP, SIMPLE IRA and SARSEP plans) cannot offer participant loans.

What is proof of income for retirees? ›

Retirement, Government Annuity, and Pension Income

a copy of retirement award letter or benefit statement, a copy of financial or bank account statement, a copy of signed federal income tax return, an IRS W-2 form, or.

What is the easiest loan to get approved for? ›

The easiest loans to get approved for are payday loans, car title loans, pawnshop loans and personal loans with no credit check. These types of loans offer quick funding and have minimal requirements, so they're available to people with bad credit.

What credit score do you need to be approved for a personal loan? ›

Different lenders will have different requirements, and may also factor in other variables. You may be able to get a personal loan with a credit score as low as 580, or even as low as 300 with certain lenders. However, the best loans are typically reserved for people with a credit score of 640 or above.

What credit score is needed for a personal loan from a bank? ›

To qualify for a personal loan, borrowers generally need a minimum credit score of 610 to 640. However, your chances of getting a loan with a low interest rate are much higher if you have a “good” or “excellent” credit score of 690 and above.

What is a retirement loan? ›

What is a 401(k) loan? A 401(k) loan allows you to borrow money you've saved up in your retirement account with the intent to pay yourself back. Even though you're lending money to yourself, it's still treated like a normal loan by charging interest that you're on the hook for.

How can I borrow money from retirement without penalty? ›

Making a Hardship Withdrawal
  1. Essential medical expenses for treatment and care.
  2. Home-buying expenses for a principal residence.
  3. Up to 12 months worth of educational tuition and fees.
  4. Expenses to prevent being foreclosed on or evicted.
  5. Burial or funeral expenses.

Can a 70 year old get a 30 year mortgage? ›

Can a 70-year-old choose between a 15- and a 30-year mortgage? Absolutely. The Equal Credit Opportunity Act's protections extend to your mortgage term. Mortgage lenders can't deny you a specific loan term on the basis of age.

At what age do you stop paying taxes on your pension? ›

Taxes aren't determined by age, so you will never age out of paying taxes. Basically, if you're 65 or older, you have to file a tax return in 2022 if your gross income is $14,700 or higher. If you're married filing jointly and both 65 or older, that amount is $28,700.

How much money can a 72 year old make without paying taxes? ›

To be taxed on your Social Security benefits you need to have a total gross income of at least $25,000, or $32,000 for couples who file jointly. If you earn more than that – at least $34,000 for an individual or $44,000 for a couple – you will see up to 85% of your benefits payments subject to tax.


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