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Availing a personal loan with favorable terms in India as a young borrower with a stable income is not a big deal. However, if you are at the retirement age of 65 or above, you might find it a bit more difficult. This is because retired individuals often find it hard to keep up with their debt repayments, because of a lack of stable income. Therefore, most banks consider them to be a credit risk and often provide loans with higher interest rates or even reject the application.
However, there are some banks and financial institutions that provide loans to pension holders. But pensioners must adhere to certain eligibility requirements as dictated by banks to obtain the loan.
In this blog, we will discuss the personal loan for pensioners eligibility criteria, benefits, features, documents required, and application process.
A personal loan can be obtained for meeting various financial needs such as medical emergencies, children’s marriage, consolidating previous debts, planning a vacation, home renovation, etc.
A personal loan doesn’t require you to pledge any security or collateral, to obtain the loan amount. Many Indian banks like SBI, Tata Capital, Bajaj Finserv, Punjab National Bank, HDFC, Axis Bank, etc. provide personal loan options with competitive interest rates and flexible tenures which can go up to six years.
The borrower will be required to repay the loan amount throughout the loan tenure in the form of EMI payments. The EMI amount is composed of a part of the principal amount and the interest amount accrued over the repayment period.
Moreover, the borrower has an option to prepay the loan amount after six months from the disbursement date, without any penalty or additional fee so as to avoid any additional repayment burden.
Following are the top 5 banks that offer personal loans for pensioners in India:
SBI is a government bank with the following features:
|Loan Amount||Up to Rs. 14 lakh|
|Interest Rate||9.75% – 10.25% p.a.|
|Loan Tenure||Up to 84 months|
|Processing Fee||0.50% to 1% of the Sanctioned Loan Amount|
|Age at the time of full repayment||78 years|
|Prepayment Charges||3% on prepaid amount|
Central Bank of India is a public sector bank with the following features:
|Loan Amount||18 times the monthly pension, maximum Rs. 10 lakh|
|Interest Rate||8.45% p.a.|
|Loan Tenure||Up to 84 months|
|Nature of Loan||Demand loan and Overdraft with diminishing Drawing Power (DP) Limit to be amortized in 60 months|
|Co-borrower||Pensioner’s spouse or legal heir(s) of the family pension beneficiary|
|Documentation Charges||Rs. 500 + GST|
Punjab National Bank is an Indian nationalized bank that offers personal loans to pension holders. Given below are some of the features of this loan product:
|Minimum Loan Amount||₹ 25,000|
|Maximum Loan Amount||₹ 10 lakh or 18 times the net monthly pension of the pensioner (whichever is lower)|
|Interest Rate||9.25% per annum onwards|
|Documentation Charges||₹ 500 + GST|
Tata Capital Limited is one of the leading financial and investment service providers in India that falls under the top 5 providers of personal loans for pensioners in India. Tata Capital offers a seamless borrowing experience with minimal paperwork and fast loan processing. Given below are some of the other features of this personal loan product:
|Interest Rate||10.99% per annum onwards|
|Collateral||No collaterals required|
|Repayment Tenure||Up to 6 years|
|Processing Fee||2.75% on the sanctioned loan amount|
|Pre-payment Charges||NIL (after 6 months EMIs are paid)|
Bank of India is an Indian nationalized bank that offers a personal loan for pensioners with the following features:
|Loan Amount||Unsecured – 15 months of Net Pension (Gross Income Less Income Tax and EMI of other loans, if any)
Secured:20 months of Net Pension
|Interest Rate||9.35% per annum|
|Processing Fee||2.00% of the loan amount,
Min. ₹ 500 & Max. ₹ 2,000 (No processing charges for senior citizens who are 60 and above)
|Nature of Loan||Term Loan, Demand Loan, Overdraft (reducible as per repayment schedule)|
Given below are some of the most significant characteristics of a personal loan for pensioners:
The interest rate depends on various parameters such as the borrowed amount, bank’s policies, age of the borrower, security or collateral offered and more. Usually, pension loans have lower interest rates compared to regular personal loans. For instance, SBI offers personal loans with interest rates starting at 9.75% per annum.
Since personal loans are types of unsecured loans, they don’t demand any security or collateral. Moreover, as they are provided to senior citizens withdrawing from a secure pension, additional collateral or security aren’t required. This is done in order to avoid any additional repayment burden on the borrower.
State and central government retired employees who receive a pension qualify for personal loans for pensioners. Some banks and financial institutions even provide personal loans to former private sector employees who receive a regular monthly pension.
Further, spouses who receive family pension on behalf of their deceased spouse are also eligible for this loan.
Similar to any other personal loan, the repayment tenure for personal loans for pension holders varies from 12 to 60 months. The maximum loan tenure differs from one lender to another. Further, the loan tenure can also depend on several other factors like the applicant’s age, credit history, income, etc.
While the eligibility criteria differ for different types of banks offering personal loans, given below are some common criteria that must be met:
A pension holder will be required to furnish a copy of the following documents to avail of a personal loan:
|Banks/NBFCs||Interest Rates (per annum)|
|Tata Capital||10.99% onwards|
|HDFC Bank||10.25% – 21%|
|ICICI Bank||10.50% – 19%|
|SBI||9.60% – 13.85%|
|PNB||7.90% – 14.50%|
|Kotak Mahindra Bank||10.25% onwards|
|IndusInd Bank||11.49% onwards|
|Axis Bank||10.25% p.a. onwards|
|Bajaj Finserv||13.00% onwards|
|IDFC First Bank||10.49% – 23%|
You can always obtain this loan product by directly visiting any of the banks that offer personal loans for pensioners. All you have to do is, fill out the personal loan application form and submit it along with all the required documents. Once your documents are verified, the officials will approve your loan application within 2 working days
Alternatively, you can simply go to the bank’s official website, sign in and fill up the application form. Furnish all the required documents, and submit them. After your documents are verified and details are found valid, the bank will approve and sanction the loan within a few hours or working days.
Yes, there are a few banks and institutions that offer personal loans for pensioners as well. But they must qualify by certain criteria set by the institutions.
Every bank has set a different minimum and maximum loan amount limit for pensioner loans. For instance, Tata Capital allows a maximum personal loan limit for pensioners of about ₹ 35 lakhs, while Fullerton offers a maximum loan amount of ₹ 25 lakhs.
Yes, a 65-year-old can also avail of a personal loan provided that he/she is still earning or at least receiving a pension of a specified amount by the bank.
Yes, a 70-year-old man can also get a loan but he has to meet the eligibility criteria framed by the bank.
You can pay your EMI through Net Banking or by submitting a cheque or a demand draft in favour of the bank that issued the loan.
The repayment tenure varies from one bank to another. Usually, pensioners get a repayment period of 12 to 36 months for obtaining a personal loan.
A pensioner can get a personal loan for different purposes such as a medical emergency, child’s marriage, planning vacations, buying a home, etc.