Finding quick and easy loans for pensioners

Entering retirement or relying on a pension should not necessarily stop you from being able to borrow money. There are loans for pensioners available from a host of UK providers that can help you spread the cost of home improvements, a family holiday or any unexpected costs. In this article, you can find all of the key information you need to know about loans for pensioners, plus some of the UK's top borrowing options for people who have retired.

What are personal loans for pensioners?

Personal loans for pensioners can be taken out by people in retirement or approaching retirement and currently on a pension. They function the same way as any other personal loan – you borrow a lump sum that you agree to pay back over a set number of months or years with interest. How much you can borrow, how long you will have to pay it back, and what rate of interest you will be charged will all depend on your credit history and financial circumstances. For pensioners, this means earning enough money from your pension payments to meet your day-to-day expenses and the monthly repayments on your loan.

A host of major UK lenders are willing to accept applications from people who rely on a pension, either in part or as their entire income. Living off a pension is not a reason in itself to be ineligible for a loan, but the retirement community encompasses a vast number of people and a wide range of circumstances. Being retired is not a reason for a lender to reject your application; however, that does not mean you won't be rejected for an alternative reason. That reason could be that your pension income is insufficient to afford your repayments, you do not have a recent history of borrowing money and paying it back, or you are considered too old.

How to find the best loan for you

Comparing different loans is a vital part of getting the best deal for you. Money to the Masses has made this process easier by partnering with Creditec*, an online comparison service. Instead of trawling through countless different provider websites hunting for the best deal, Creditec's personalised search results will show you the essential details you need to know, all in one place. If you are eligible, your tailored list will feature the loans that you are more likely to be accepted for, cutting down the chance of any applications you make being rejected should you go on to complete a full application with the provider. Your search results are built using a soft credit search, so there will be no damage to your credit score. Click on this link to get started*. If you are not eligible for a loan with any of the providers on the panel, then you may be shown a variety of alternative products that may be suitable for you. You are under no obligation to continue with them if you feel they are not suitable for your circumstances.

Best loans for pensioners – October 2024

We have used the representative examples of repaying a £1,000 loan over three years, a £5,000 loan repaid over five years, a £10,000 loan repaid over five years, a £20,000 loan repaid over five years and finally, a £25,000 loan repaid over five years to source the figures in this table. Borrowing more or less will often change the advertised rate of interest, as will altering the loan term. It is important to remember that the loan amount and rate you are ultimately offered will be based on your credit history and financial circumstances, so the representative APR you are offered may differ from the amount you see in the tables below.

The best rates on a £1,000 loan

Loan provider	Representative APR (from)	Available loan term	Available loan amount	Monthly payment	Upper age limit	Pension income accepted	Eligibility checker?
Santander	13.5%	1 - 5 years	£1,000 - £25,000	£33.56	Not specified	Yes	No
M&S Bank	14.9%	1 - 7 years	£1,000 - £25,000	£34.16	Not specified	Yes	Yes
AIB (NI)¹	16.4%	1 - 5 years	£1,000 - £25,000	£35.01	Not specified	Yes	No
HSBC	16.9%	1 - 5 years	£1,000 - £25,000	£35.02	Not specified	Yes	No
Zopa	22.9%	1 - 5 years	£1,000 - £25,000	£37.57	Not specified	Yes	Yes
TSB	27.9%	1 - 7 years	£300 - £50,000	£39.69	Not specified	Yes	No
Halifax	29.7%	1 - 7 years	£1,000 - £50,000	£40.44	Not specified	Yes	Yes

Representative APR is based on a 3-year loan term

¹You must be an existing personal current account customer with AIB (NI) and registered for Online Services

The best rates on a £5,000 loan

Loan provider	Representative APR (from)	Available loan term	Available loan amount	Monthly payment	Upper age limit	Pension income accepted	Eligibility checker?
Tesco Bank	7.2%¹	1 - 10 years	£1,000 - £35,000	£98.94	74 at the end of the loan term	Yes	Yes
Santander	7.2%	1 - 5 years	£1,000 - £25,000	£98.94	Not specified	Yes	No
M&S Bank	7.4%	1 - 7 years	£1,000 - £25,000	£99.38	Not specified	Yes	Yes
AIB (NI)²	7.9%	1 - 5 years	£1,000 - £25,000	£100.83	Not specified	Yes	No
HSBC	9.9%	1 - 5 years	£1,000 - £25,000	£104.95	Not specified	Yes	No
TSB	11.9%	1 - 7 years	£300 - £50,000	£109.45	Not specified	Yes	No
Halifax	17.9%	1 - 7 years	£1,000 - £50,000	£123.14	Not specified	Yes	Yes
Zopa	22.9%	1 - 5 years	£1,000 - £25,000	£187.68	Not specified	Yes	Yes

Representative APR is based on a 5-year loan term

¹Clubcard members receive a preferential rate; non-members will get from 7.9% and pay £100.49 a month

²You must be an existing personal current account customer with AIB (NI) and registered for Online Services

The best rates on a £10,000 loan

Loan provider	Representative APR (from)	Available loan term	Available loan amount	Monthly payment	Upper age limit	Pension income accepted	Eligibility checker?
Tesco Bank	6.1%¹	1 - 10 years	£1,000 - £35,000	£193.02	74 at the end of the loan term	Yes	Yes
TSB	6.2%	1 - 7 years	£300 - £50,000	£193.47	Not specified	Yes	No
Santander	6.2%	1 - 5 years	£1,000 - £25,000	£193.47	Not specified	Yes	No
M&S Bank	6.2%	1 - 7 years	£1,000 - £25,000	£193.47	Not specified	Yes	Yes
Halifax	6.6%	1 - 7 years	£1,000 - £50,000	£195.23	Not specified	Yes	Yes
HSBC	6.6%	1 - 5 years	£1,000 - £25,000	£195.23	Not specified	Yes	No
AIB (NI)²	7.1%	1 - 5 years	£1,000 - £25,000	£197.85	Not specified	Yes	No
Zopa	22.9%	1 - 5 years	£1,000 - £25,000	£269.40	Not specified	Yes	Yes

Representative APR is based on a 5-year loan term

¹Clubcard members receive a preferential rate; non-members will get from 6.5% with monthly repayments from £194.79

²You must be an existing personal current account customer with AIB (NI) and registered for Online Services

The best rates on a £20,000 loan

Loan provider	Representative APR (five-year term)	Available loan term	Available loan amount	Monthly payment	Upper age limit	Pension income accepted	Eligibility checker?
Tesco Bank	6.1%¹	1 - 10 years	£1,000 - £35,000	£386.05	74 at the end of the loan term	Yes	Yes
TSB	6.2%	1 - 7 years	£300 - £50,000	£386.94	Not specified	Yes	No
M&S Bank	6.2%	1 - 7 years	£1,000 - £25,000	£386.93	Not specified	Yes	Yes
Santander	6.4%	1 - 5 years	£1,000 - £25,000	£388.70	Not specified	Yes	No
Halifax	6.6%	1 - 7 years	£1,000 - £50,000	£390.47	Not specified	Yes	Yes
AIB (NI)²	7.1%	1 - 5 years	£1,000 - £25,000	£395.69	Not specified	Yes	No
HSBC	7.4%	1 - 5 years	£1,000 - £25,000	£397.54	Not specified	Yes	No
Zopa	22.9%	1 - 5 years	£1,000 - £25,000	£538.80	Not specified	Yes	Yes

Representative APR is based on a 5-year loan term

¹Clubcard members receive a preferential rate; non-members will get from 6.5% with monthly payments from £389.58

²You must be an existing personal current account customer with AIB (NI) and registered for Online Services

The best rates on a £25,000 loan

Loan provider	Representative APR (five-year term)	Available loan term	Available loan amount	Monthly payment	Upper age limit	Pension income accepted	Eligibility checker?
Tesco Bank	6.1%¹	1 - 10 years	£1,000 - £35,000	£482.57	74 at the end of the loan term	Yes	Yes
TSB	6.2%	1 - 7 years	£300 - £50,000	£483.67	Not specified	Yes	No
Santander	6.4%	1 - 5 years	£1,000 - £25,000	£485.88	Not specified	Yes	No
Halifax	6.6%	1 - 7 years	£1,000 - £50,000	£488.08	Not specified	Yes	Yes
M&S Bank	6.9%	1 - 7 years	£1,000 - £25,000	£491.40	Not specified	Yes	Yes
AIB (NI)²	7.1%	1 - 5 years	£1,000 - £25,000	£494.61	Not specified	Yes	No
HSBC	7.4%	1 - 5 years	£1,000 - £25,000	£496.92	Not specified	Yes	No
Zopa	22.9%	1 - 5 years	£1,000 - £25,000	£673.50	Not specified	Yes	Yes

Representative APR is based on a 5-year loan term

¹Clubcard members receive a preferential rate; non-members will get from 6.5% with monthly payments from £486.97

²You must be an existing personal current account customer with AIB (NI) and registered for Online Services

Is there a maximum age limit on loans for pensioners?

Most major lenders do not publish a maximum limit on the age of applicants they will consider for a loan. However, the applicants' age will still be taken into account. This means that many retirees could struggle to get a personal loan if the lender judges they are too old to realistically be able to repay the debt in their lifetime. The exact cut-off age will vary from lender to lender but will usually be 70 or 75 at the end of the loan term. You may not see this published on a lender's website, but it will be a significant factor during the application process.

How much can a pensioner borrow?

How much you can borrow will depend on a few key factors. The most important is likely to be your income – the less money you earn, the less likely a lender will be to agree to lend you money. You will need enough cash to convince the provider that you can comfortably meet the monthly repayments. If your pension income is sizeable enough, you should be able to borrow up to £25,000 from most mainstream lenders, though others will stretch to as much as £50,000 for certain applicants.

As with all forms of borrowing, it is important to only borrow as much as you need. A lender's maximum limit is not a target to hit. Instead, you should determine precisely how much you require for your planned spending and apply to borrow that amount. Borrowing more than you need will only bring unnecessary debt and extra interest costs.

Pros and cons of loans for pensioners

Here are the major pros and cons to consider before you apply for a loan for pensioners:

Pros of loans for pensioners

• Spread the cost of a significant expense - You could pay for a new car, a holiday, home repairs or a new conservatory over the course of a few years rather than as one upfront payment that may take years to save up for.
• Cover emergency expenses - You may not have enough cash in the bank to deal with car repairs, a busted boiler or a damaging leak, but you could get the money through a loan.
• Fixed repayments are easier to budget for - Personal loans for pensioners are fixed-rate loans that are repaid in equal monthly instalments, which should be much easier to fit into your budget than other forms of borrowing.
• Personal loans for pensioners are unsecured - You will not need to risk a valuable asset by securing it against your debt, as you would need to with a secured loan.
• Flexible repayment terms - Depending on your circumstances, you may be able to choose to increase your monthly payments in order to have a shorter loan term or stretch out your loan term to reduce your monthly payments. This will usually need to be finalised during the application process.
• Difficult to run up debt - Unlike with other forms of borrowing, you will not be able to continue to borrow beyond your initial lump sum. This should help you avoid slipping into dangerous spending habits and problem debt.

Cons of loans for pensioners

• Borrowing is expensive - Saving up to pay for something may take longer than borrowing, but it will be cheaper as you will not be paying interest on a debt.
• You may not be able to borrow as much as you need - If you have a small income, for example, because you rely on the State Pension, you may not be able to borrow as much money as you had hoped.
• You may not get the advertised rate - People with bad credit may find that the cost of borrowing is higher than expected. The representative APR, which is what you can see on this page, is what the lender expects at least 51% of successful applicants to be offered. You may ultimately get a higher figure.
• Missed repayments will damage your credit score - Missing payments on your debt will lead to a mark on your credit file that could make borrowing in the future more difficult.
• You could leave a reduced estate - If you die before the end of the loan period, the debt will need to be repaid by your estate. This could affect how much you can leave in your will.

What happens to your loan if you die?

Personal loans for pensioners are not usually written off if the borrower dies, just like any other type of personal loan. In most cases, money will be deducted from your estate in order to repay the debt, which is made up of the assets you leave behind when you die. This means you may not be able to leave as much in your will as you had hoped if you die before you repay your outstanding debts.

One exception would be if you have taken out a joint loan, as in this case, the surviving borrower would have to continue to repay the debt alone.

Can you borrow against your pension?

Borrowing against your pension is possible but differs from a personal loan. These loans are often referred to as a pension advance and involve securing a debt against the value of the assets in your pension pot. The loan will last several years, during which part or all of your pension payments will go to the lender to repay the debt.

It is a very expensive way to borrow money, comparable to a payday loan, and should usually be avoided unless you have taken expert financial advice beforehand.

Alternatives to personal loans for pensioners

A personal loan will not be the best option for all pensioners. The right choice for you will depend on your personal circumstances and financial situation. Here are some alternatives to consider:

Secured loans

A secured loan differs from a personal loan, which is unsecured, mainly because you will need a valuable asset to use as security against the debt. In most cases, this will be your home. You can usually borrow more money with a secured loan, but if you fail to repay what you owe, the lender could force the sale of your asset to cover the debt.

Secured loans can suit certain pensioners who may have a low income but own a significant amount of equity in their home. Owning more of your home should make it more likely that you can borrow a large sum, while the ability to spread a secured loan over a longer period of time can make the monthly repayments more affordable.

Credit cards

A credit card is a much more flexible way of borrowing money compared to taking out a loan. You only pay back what you spend and you can take advantage of limited-time 0% interest options too, which can help you spread the cost of a purchase without paying any interest at all.

One limitation of a credit card is how frequently it is not accepted as a method of payment. This could be an issue if you are buying a car or planning home improvements. Instead of a standard purchase credit card, you could opt for a money transfer credit card. These cards allow you to transfer money to your current account, allowing you to pay with your debit card or bank transfer.

Car Finance

If you are researching loans in order to buy a car, you could consider car finance instead. There are a few different types of car finance available in the UK, some that involve you owning the car outright and some that do not. We explain more in our article 'Buying a car: what are the best finance options?'.

Remortgage

You could consider remortgaging to access extra cash if you have enough equity in your home, either because you have paid a significant portion of your mortgage off over the years or because the value of your house has risen. You would need to take out a new mortgage to cover the value of your existing mortgage if you have one, plus the additional money you need.

A mortgage usually involves more fees than a standard personal loan, and though many providers will lend to older people, there will likely still be an age cut-off.

Equity release

Equity release is another way to borrow against your home but crucially does not require compulsory repayments. The interest on the debt is added to the loan amount, which is then repaid when you die, usually from your estate once the property is sold. Alternatively, you can choose to pay back some of the loan during the term, for example, to cover the interest charges. You could also choose to receive the money incrementally rather than as a lump sum.

You will usually need to be over 55 to apply for an equity release product and you should keep in mind that it will affect how much you can leave as an inheritance.

Credit unions

Credit unions are community lenders operated by a membership to benefit other members. You must share a 'common bond' with other members in order to become a member yourself, which could be living or working in the same area, working for the same employer, or belonging to the same religious institution. There is an online credit union search facility here that can help you find what is available in your area.

 

 

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