Getting most of your income from pension and finding yourself in the need of a $2,400 loan? Well, you might have fewer options than people with steady jobs, but there are still some ways for you to acquire that cash. It will take some digging into the topic though, so read on to know more and make an informed decision.
What Type of Pension Will a Lender Consider
There are mainly three types of pensions recognized by loan providers in the US. They include:
- Retirement benefits from an employer. In such cases a retired employee either gets a 401(k)/403(b) plan or a pension, the amount of which is calculated by the employer.
- Retirement income from Social Security that a person gets after they reach a certain age and retire from their main career.
- Disability income from Social Security that people get if they are unable to work due to their disability.
Steps to Applying for Loan on a Pension
- Choose a suitable lender. There are a few important things to look for in a provider, particularly, their reputation, terms, and APRs, but most importantly – whether they offer loans for people on a pension.
- Check your eligibility according to the lender’s requirements.
- Apply – online or in-store. You might need to provide documents with personal and financial information (including information about your pension, assets, debts, credit history, etc.)
- Get your money on the same day or the next day.
When Not to Take Out a Loan
Some lenders would offer you options called pension advances, pension sales, loans or buyouts. What they mean is that you’d sign over your pension payments to them in exchange for a loan for a really long period of time – somewhere between 5 and 10 years.
This type of a loan is the most tricky and expensive out there, with APRs far over 100%, interests snowballing, and – on top of all that – some providers require clients to get life insurance naming it as the beneficiary.
You should carefully think before going for such a loan, and do your best to avoid it unless it’s an absolute emergency. Also, never borrow from a pension advance company that claims to be endorsed by the VA: it is most definitely a scam, as it is illegal for lenders to take away military pensions and veteran benefits, and former military members are ineligible for such a loan unless they receive a pension from an additional source.
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