Pensioner loans


It may be that time in your life where work has become a distant memory, the kids are all out of home and you’re enjoying being a man or lady of leisure.

But while you may be retired and living without the stresses of work, you can still find yourself under financial pressure in your twilight years.

Ultimately, you never know what unexpected expenses may arise and when you might you need to take out a pensioner loan for some extra cash. It may be for a new car, sudden medical expenses or to replace household appliances.

What are my loan options as a pensioner? 

Well, loan options can be limited for pensioners or retirees as it’s hard to prove to a lender you can make the repayments. This is because many retirees may not have a regular income and may be living from pension cheque to pension cheque (which just covers daily expenses).

Generally speaking, if you have a substantial amount of money sitting in a bank account as a pensioner then you’re in a much better position to prove you can make repayments and therefore borrow more money from a lender.

Borrowing options for pensioners:

While there may be obstacles for pensioners when it comes to securing a personal loan, rest assured there are still options to help you out when things get a little tight.

  • Personal loan with current provider: It pays off to have held an account with a financial institution for a significant period of time. They are familiar with your financial history and are more likely to offer you a personal loan than if you were to apply from scratch with a new lender. Head to the Mozo guide on types of personal loans to learn more.
  • Reverse mortgage: These loans are for retirees and pensioners who are usually ‘asset rich’ but ‘cash poor’. It allows people from the age of 60 to reverse the equity in their property into cash. You don’t need an income to qualify nor do you need to make repayments but like any personal loan, interest is charged and there are fees. The debt is repaid to the lender when the borrower sells the property, moves into a retirement home or the last surviving borrower dies. Mozo doesn’t keep information in its database on providers that offer reverse mortgages, we suggest you check out the Government’s MoneySmart site for more information.

Government Assistance Options:

If you’re struggling to get approval for a loan from a financial institution, the Government has implemented some special schemes to assist people on the pension.

  • Pensioner Loans Scheme: For seniors who are of pension age and get or are eligible for a qualifying pension. This include the Age Pension, Carer Payment or the Disability Support Pension. This scheme allows you to access capital tied up in assets to provide you with extra income.
  • Advance Payment: If you’ve been receiving regular Centrelink pensioner payments you may be eligible for an advanced payment of either one or three week’s pay. The amount must be repaid within six months but good news, the advance payment is interest free.
  • No Interest Loans Scheme (NILS): This is an interest free loan of up to $1,500 to help cover essential household items, car maintenance or medical emergencies. To apply for this scheme, you must hold a Government Centrelink pension card.

For more information

Pensioner Loan Traps

It’s very easy to fall for those loud in-your-face ads for instant cash loans. But while these ‘payday loans’ may appear easily attainable to provide a quick fix when times are financially tough, they aren’t as pretty as they may seem. Mozo does not support these lenders for the following reasons:

  • Payday loans can become addictive, causing a vulnerable borrower to spiral into an unaffordable amount of debt
  • Payday loans come with hefty fees.  According to MoneySmart, payday loans don't charge interest but can charge a heap in fees. When it comes to these costs; expect a hefty upfront fee of 20% on the amount that’s being borrowed as well as around 4% in a monthly service fee.  
  • Pay day loans are short term, therefore the money needs to be repaid quickly e.g. 30 days, this can place huge financial pressure on the borrower

Read Mozo’s insight into short term personal loans.

Other options for getting extra cash:

While you embrace retirement you may find you have some extra time on your hands.

Did you know you can still remain in the workforce while on a pension?

The Work Bonus is a Government incentive for pensioners to remain in the workforce past age pension age by increasing the amount you can earn before your pension is reduced.

Here is a list of ways to earn some extra cash without having to take out a pensioner loan:

  • Sell some unwanted gear on eBay, Gumtree or Facebook Marketplace 
  • Hold a garage sale; people love vintage clothes and knick-knacks!
  • Keep fit while earning some extra cash dog walking
  • Coach a local sporting team
  • Tutor university or school students on your field of expertise