Best Loan Alternatives for Senior Citizens

In the words of Grammy Award-winning singer Alan Jackson," the older I get, the better I am". But is that the case for the elderly around us?

According to CNBC, a survey carried out in 2018 revealed that every one in seven filers for bankruptcy in the United States is aged 65 and above. A recent report on the quarterly household credit and debt state of the economy also revealed that from 1999 to 2022, the total debt balance of Americans aged 60-69 years recorded a 623.3 percent(%) increase, from 0.38 trillion to 2.38 trillion (in dollars). This abrupt increase over the past two decades has left a bad taste in the mouths of economic experts and financial analysts.

Some might wonder why there's such a high volume of senior citizens seeking loans. As much as the younger adults, millennials, and Gen Zs have needs, the elderly also does. They have dreams and aspirations they still hope to fulfill, bills and taxes to pay, as well as other expenses.

With the constant derailing of the pension fund system, most senior citizens often have no choice but to seek out bank loans. These loans come with a burden since they're tedious to repay.

Before deciding to march to a bank for a loan as a senior, here are some loan alternatives to consider. They are much easier to acquire and less stressful to repay.

Pawn Items

This is one of the quickest ways to get fast loans as a senior citizen. Pawn shops are designed to help you borrow money in return for temporarily losing possession of a valuable item. These items are returned after meeting the repayment requirements.

Pawn shops inspect the item(s) to be pawned and then estimate its worth in monetary value according to the market value of similar items. Corresponding cash is then leased to the owner of the items after a means of identification or proof of ownership is submitted. The pawn shop is, however, eligible to resell such items in the event of a default on repayment.

Items eligible for pawning, range from jewelry to artifacts, household items, or even gadgets.

Sell Valuables

This is another common means for seniors to get by when they are strapped for cash. Letting go of some of the things precious to us can be difficult, but it remains a much better alternative to acquiring a loan that you might be unable to repay in the nearest future.

You can preserve old family memorabilia or heirlooms that hold so much sentimental value in form of photos, and then sell them off as an alternative to asking for a bank or payday loan.

Reverse Mortgage

This refers to borrowing against the value of equity on your home. It is one of the safest ways to get money for senior citizens who own FHA-approved housing units or condos. Some eligibility criteria include:

● You must be aged 62 or older to apply

● You must reside in the house to be used for at least six months and a day in the year.

● House or condo must be FHA-approved.

● You cannot borrow above the value of your house.

If you meet these requirements, you are eligible to get paid a particular percentage (usually between 35 and 70 percent) of the value of your house on request. This differs from the outright mortgage, which requires a monthly repayment plan.

In most reverse mortgage cases, the lending institution would then take responsibility for selling the house to repay the loan after the borrower is late or has moved out of the home.

To check the value of your property, you will need a reverse mortgage calculator. This calculator takes the value of your property, as well as the current value of any mortgage you have left to pay on the property and gives you an estimated value that you're likely to gain as a loan.

This is the best way to ensure senior citizens receive loans without losing their residential homes to banks or other lending institutions while alive.

Family or Friends Loan

Going to immediate family or friends can be helpful in times of financial need. It's always a better option than entrapping yourself in an endless cycle of payday or bank loans. As hard as it may be, it would save you a lot more stress and embarrassment in the long run.

Let them know you're serious about it by drafting out a repayment contract that would help you return the money eventually.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.