Top 5 Personal Loans For Pensioners

A cash crunch in your retired life may lead to you pressing that panic button. But hold on! We’ve got some quick and easy Personal Loans for pensioners too!

We know a financial emergency can occur unexpectedly. If you face a financial emergency while you are employed, you can get a Personal Loan. But, what happens if you are retired? Would you get a Personal Loan if you’re drawing a pension? Let’s find out.

Additional Reading: Your Guide To Retirement

For all those people who are retired and draw a pension, there is still hope. A few banks have now begun offering loan schemes for pensioners. So wipe those worry lines off your forehead and read on. We’ll tell you everything you need to know about Personal Loans for Pensioners. Keep these things in mind for quick and easy processing of your loan.

Additional Reading: Pension Planning For Retirement

All about Personal Loans for Pensioners

Eligibility

Banks offer Personal Loans to both Central and State Government employees drawing their pension in the respective bank branches. Loans are also available to family members drawing a pension on account of a deceased pensioner.

Loan Repayment Tenure

Pensioners availing Personal Loans can repay the loans through regular EMIs. The EMI for such loans ranges from 24 to 60 months depending on the bank and the quantum of loan.

Additional Reading: What Is EMI And How Is It Computed?

Collateral Security

Banks may seek collateral security depending on your individual case and the amount of loan required by you. Loans are usually approved if they come with a guarantee from a spouse or other family member, including a third-party guarantee acceptable to the bank.

Additional Reading: Things To Keep In Mind As A Loan Guarantor

Interest Rate on Loan 

Similar to other loans, the rate of interest for Personal Loans for pensioners is decided according to the base rate of the bank.

The rate of interest for Personal Loans for pensioners is usually lower than the interest rate for the average Personal Loan.

Top 5 Personal Loan Schemes for Pensioners

We’ll give you an overview of 5 popular bank loan schemes offering Personal Loans to pensioners.

1. State Bank of India Loan for Pensioners

State Bank of India offers Personal Loans to Central or State Government pensioners, drawing a pension through any of the SBI Bank branches. SBI Loan for Pensioners is available to pensioners below the age of 76 years. The loan is also available to family members of pensioners, who are receiving a pension after the death of the pensioner.

The processing fee on this loan is nominal for all pensioners and nil for defence pensioners.

Additional Reading: What Are The Charges And Fees On Personal Loans?

The eligibility of this loan is categorised as under:

• For Central & State Government Pensioners

 Eligibility: The pensioner should not be more than 76 years old. Pensioners whose pensions are disbursed by Government Treasuries by means of cheques drawn in favour of SBI are also included under this category.

In such cases, the original Pension Payment Order (PPO) remains in the custody of the Treasury and the pensioner gives a mandate to the Treasury for payment of pension through a particular branch of a bank. Such pensioners will be included under the purview of the scheme subject to the following conditions:

• The concerned pensioner must furnish an irrevocable undertaking that he will not amend his mandate to the Treasury to pay his pension from the branch during the tenure of a loan availed by him from SBI.
• The Treasury concerned consents in writing that it will not accept any request from the pensioner to transfer his pension payment to any other bank/branch till a No Objection Certificate (NOC) is issued by the bank.

All other terms and conditions of this loan will be applicable including the guarantee of the spouse (who will be eligible for a family pension) or a suitable third party.

Loan Amount: The minimum loan that can be availed under this scheme is Rs. 25,000.

The maximum limit is set at 18 months’ pension with a ceiling of:

=72 years at Rs. 14 lakhs

>72 but =74 years at Rs. 12 lakhs

>74 but =76 years at Rs. 7.50 lakhs

Age and repayment period: For pensioners up to the age of 72 years the repayment period is 60 months.

For pensioners who are above the age of 72 and below the age of 74 years, the repayment period is 48 months.

Lastly, for pensioners who are more than 74 years of age and less than 76 years the repayment period is 24 months.

Additional Reading: Common Retirement Planning Myths Debunked

• For Defence Pensioners

Eligibility: Pensioners of armed forces, including the Army, Navy, Air Force, Paramilitary forces like CRPF, CISF, BSF, ITBP, Coastguards, Rashtriya Rifles and Assam Rifles whose PPO is with SBI are eligible to apply for a loan under this scheme.

Loan Amount: The minimum amount that can be availed is Rs. 25,000.

The maximum amount is set at 36 months’ of pension with a ceiling of Rs. 14 lakhs for pensioners who are up to 56 years of age.

And 18 months’ pension with a ceiling of:

>56 years but =72 years at Rs. 14 lakhs

>72 years but =74 years at Rs. 12 lakhs

>74 years but =76 years at Rs. 7.50 lakhs

Age and repayment period: For pensioners up to the age of 56 years the repayment period is set at 84 months.

For pensioners who are above the age of 56 and up to the age of 72 years the repayment period is set at 60 months.

For pensioners who are more than 72 years and below the age of 74 years, the repayment period is set at 48 months.

For pensioners who are above 74 years of age and up to 76 years old, the repayment period is set at 24 months.

Additional Reading: How To Plan For Retirement In Your 50s

• For Family Pensioners (including defence family pensioners)

Eligibility: A family pensioner is a spouse authorised to receive a pension after the death of the pensioner. However, the family pensioner must not be more than 76 years of age.

 Loan Amount: The minimum is similar to the other schemes and set at Rs. 25,000.

The maximum cap is 18 months of pension with a ceiling of:

=72 years at Rs. 5 lakhs

Age and repayment period: For family pensioners up to the age of 72 years the repayment period is set at 60 months.

For family pensioners who are more than 72 years of age and up to 74 years, the repayment period is set at 48 months.

For family pensioners who are more than 74 years of age and up to 76 years, the repayment period is set at 24 months.

Repayment Mode: SBI will set standing instructions to debit your pension account for repayment through an Equated Monthly Instalment (EMI).

Prepayment Charges: Any prepayment of EMIs in full or in part and closure of account before the end term will attract charges of 3% on the prepaid sum.

There will be no prepayment or foreclosure charges applicable if the account is closed from the proceeds of a new loan account opened under the same scheme.

Additional Reading: Get A Sweet Deal When Prepaying Your Personal Loan

2. Central Bank of India Personal Loan

Eligibility: Central Bank of India offers Personal Loans to pensioners, including the families of pensioners who are drawing pension through any of the Central Bank of India branches. Pensioners getting their pension disbursed through the Treasury directly to their Savings Accounts are also eligible for the loan.

Loan Amount: Pensioners below 75 years can avail a minimum loan amount equal to 18 months pension and a maximum amount of Rs. 5 lakhs.

Pensioners above 75 years can avail a minimum loan equal to 12 months pension and a maximum amount of Rs. 2 lakhs.

3. PNB Personal Loan Scheme for Pensioners

Eligibility: Punjab National Bank offers Personal Loans to all types of pensioners drawing a pension from any branch of the bank.

Loan Amount: The loan comes with no margin money and the quantum of loan amount can vary from a minimum of Rs. 25,000 to a maximum amount equal to 18 times your net monthly pension (or 20 times your monthly pension in case of defence pensioners) as follows:

Rs. 10 lakhs for pensioners up to the age of 70 years

Rs. 7.50 lakhs for pensioners above 70 years and up to 75 years

Rs. 5 lakhs for pensioners above 75 years

There will be no processing fee on this loan.

Guarantor: PNB accepts the guarantee of spouse or guarantee of earning children (preferably a government employee) or even a third-party guarantor.

Loan Repayment Tenure: The loans to pensioners should be repaid in a maximum of 60 EMIs.

Additional Reading: 5 Post Retirement To-Do’s That Don’t Include Babysitting Your Grandchildren

4. Allahabad Bank Personal Loan For Pensioners

Eligibility: Allahabad Bank offers Personal Loans to all State Government, Central Government, teachers and bank employee pensioners whose monthly pensions are credited in the branch of the bank.

The pensioner should not be more than 73 years old as on the date of loan disbursement and the loan should be repaid before the pensioner attains the age of 75.

Loan Amount: The minimum loan given is Rs. 25,000. However, you can avail an amount equivalent to 10 months’ pension under these circumstances:

Pensioners, up to 65 years of age, can avail up to Rs. 2 lakhs

Pensioners above 65 years of age can avail up to Rs. 1 lakh

There is no processing fee on this loan. The maximum repayment period is set at 48 months.

Additional Reading: Financial Moves You Should Make A Few Years Before Retirement

5. BOI Star Pensioner Loan Scheme

Eligibility: Bank of India (BOI) provides Personal Loans to regular pensioners or family pensioners drawing a monthly pension through their branch. They also provide loans to retired employees (other than dismissed/compulsorily retired).

You can avail a loan from Bank of India if your age at the time of the loan repayment does not exceed 75 years.

Loan Amount: If the pension account is held with any BOI branch you can get a loan equal to 15 times your monthly pension with a maximum loan amount of Rs. 5 lakhs.

If you receive your pension directly at the Branch from the Treasury/DPDO you can get a loan equal to 15 times your monthly pension with a maximum loan for pensioners fixed at Rs. 3 lakhs and for family pensioners at Rs. 1.5 lakhs.

For those who are above 75 years old the maximum limit that can be borrowed is Rs. 1 lakh or 3 times the net pension up to Rs. 50,000.

Retirement planning is crucial but you don’t have to be worried sick about not being able to get a loan. With these Personal Loan options, any pensioner can rest easy. There are abundant schemes tailor-made for you that could tide you over a cash crunch.