The Soon-To-be Retiree’s Guide on Loans
Retirement is not only a time for vacation and it’s not even about starting a sedentary lifestyle retirement is a new chapter in life when you can pursue your passion without worrying about your income. But, not everyone is ready to exit the work force. With bad credit, you may have limited borrowing capacity, and your retirement income may not be enough to cover all your expenses.
Here are some steps you can follow to prepare for your retirement:
Get your credit report.
Some people ignore their credit ratings, especially if they are not planning to get a loan anytime soon. But, your credit file is important not only in obtaining a loan—but in assessing your financial situation. If your utilization rate is too high, meaning you always reach the maximum credit limit for your revolving credit accounts—it could mean that you are spending above your means. Or, you have not been managing your debts wisely. If that’s the case, obtaining a copy of your credit report can help you change that.
Look into the credit balances, especially the negative entries and check if there are some errors. When you spot them, you can file a dispute with the credit bureau or the reporting agency itself. For example, if you know that you have made payments on a certain date, but it was reported late, you can contract your credit provider about it. Remember that late payments can reduce your credit rating. Your credit file can also tell you about your overdue debts and how bad they are affecting your credit.
As much as possible, don’t get involved with student loans.
One of the most costly debts for older people is student loan. It’s completely understandable for you to help your children or your grandchildren finish their studies. But, taking out a student loan in your name or even cosigning can backfire especially if you have to live on fixed retirement income. How can you pay for the student loan debts when you can’t generate additional income anymore?
Perhaps, you have to look for another job to replace your retirement savings before you leave your office. But, with the limited time you have—it is difficult to repay the loan before you retire. If you’re over 60, and you’re still co-signing student loans, or obtaining one, you may experience difficulty in repaying it during your retirement.
As you grow older, the likelihood of defaulting on your loan may continuously increase. What makes it worse is the fact that you cannot discharge this type of loan in bankruptcy. So, you cannot just shut off the door to aggressive debt collectors—when you don’t pay off a loan, the law allows aggressive measures to be done by credit institutions against you. Your social security savings or retirement income may also suffer—because the courts can also offset it against your debts, when applicable.
Pay your credit card debts.
Would you still prefer to have a credit card debt of $3000 or more each year? Yes it is possible to have a balance like that especially if you don’t adjust your lifestyle the moment you start living on retirement income.
Credit card debt usually comes with high interest rate and hefty fines when you fail to pay on time. That means having to make extra payments on your credit card balance for several years. For example, you have a $3000 balance and you’re making minimum payments of $110 each month with an interest of 19.01 each month. It would take you 36 months to pay the loan and a total interest of $960!
Take out debt consolidation loans for people with bad credit.
While you’re still able to work and pay off your existing debts, without compromising your future income—why don’t you consolidate your debts?
Business Loans offers low-interest debt consolidation loan product for people with bad credit. It rolls all your consumers debts into one—saving you the hassle to pay off several debts in a month and saving you lots of interests in the process. Aside from simplifying your debt, you also have the freedom to lengthen the duration of you loan, or to shorten it. If you have enough financial resources for today, it will really help if you pay for those debts now. At least, you can still find an additional source of income in case of default. But if you choose to lengthen it, your retirement salary may not be enough, especially if there are medical and living expenses to take care of, when the time comes.
Learn more about our loan products for soon-to be retirees with bad credit by making an enquiry today.