Pensioner loans

By Polly Fleeting ·

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. However, while you’re retired and living without the stresses of work you can still find yourself under financial pressure in your twilight years. 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 household appliances.

Loan options are limited for pensioners or retirees as it’s hard to prove to a lender you can make the repayments when you don’t have a regular income and are living from pension cheque to pension cheque, which just covers daily expenses. If you have a substantial amount of money sitting in a bank account then you’re in a much better position to prove you can make repayments and therefore borrow more money from a lender.

Personal Loan Comparison Table - page last updated September 19, 2020

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  • 8.00% p.a.

    8.21% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 8.00% would cost $36,647.51 including fees.

  • Hot DealZERO Upfront fee until 30th September 2020^

    6.95% 19.99% p.a.

    6.95% 19.99% p.a.based on $30,000
    over 5 years

    Terms from 1 to 5 years. Representative example: a 5 year $30,000 loan at 6.95% would cost $35,599.71 including fees.

  • 5.75% 21.99% p.a.

    6.47% 25.11% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 5.75% would cost $35,190.18 including fees.

  • 7.65% 26.99% p.a.

    7.65% 26.99% p.a.based on $30,000
    over 5 years

    Terms from 3 to 7 years. Representative example: a 5 year $30,000 loan at 7.65% would cost $36,196.75 including fees.


Borrowing options for pensioners:

While there may be obstacles for pensioners when it comes to securing a personal loan rest assure 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 but are ineligible for the Age Pension due to assets or income. 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 $1,200 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 that flash before you during late night TV offering fast, instant cash loans. These ‘payday loans’ may appear easily attainable, providing a quick fix when times are financially tough but they aren’t as pretty as what 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
  • Interest rates are exorbitant, usually 48% pa, credit card rates are a lot lower
  • When it comes to fees; expect a hefty upfront fee of 20% on the amount that’s being borrowed
  • 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

*The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Polly Fleeting
Polly Fleeting
Money writer

Polly Fleeting is a personal finance writer here at Mozo, specialising in loans and credit cards. Her work is aimed at helping people find ways to make smart product choices, reduce debt and get more for their hard-earned dollars. Polly has a degree in Journalism from the University of Technology, Sydney.