Personal Loan

How Do Personal Loan Schemes for Retired Pensioners Work in India?


Whether you are prepared or not, financial needs can arise at any time. In such cases, personal loans can be greatly useful because they are typically unsecured. They are also not tied to a specific purpose. 

Although personal loans are easy to get for those with a stable income, older adults and retirees may have difficulty getting them. As pensioners lack a steady source of income, loan lenders view them as high-risk people.

The good news is that many Indian lenders have realised the financial needs of senior citizens. They have thus come forward to offer personal loans for pensioners. You should also know how to calculate personal loan interest for your benefit. 

What is a Personal Loan for Pensioners?

Personal loans for pensioners are loans given to people over the age of 60. There is no major difference between personal loans for young people and personal loans for seniors. But, they differ in terms of the needs and the rate of interest charged by banks. 

The most critical thing for senior citizens is that they have a pension. Some lenders refuse to give loans to senior citizens who do not have a stable source of income. If you have a pension, you may be able to apply for a loan in this case.

Process to Apply for a Pensioners’ Loan

The steps for applying for a personal loan for pensioners are as follows: 

  • You should select a lender and go to its official website. 
  • Then, you should visit the ‘Loans’ section and choose ‘Personal Loan’ from the list of options. 
  • You should put your information and upload any documents needed.
  • After that, verification will take place. 
  • Your request will be approved quickly and the funds will be deposited into your account within a few hours after the entity verifies the information provided.

Documents Needed to Apply for a Personal Loan for Pensioners

If you are a senior citizen, lenders may request extra information before approving your loan. If you want to apply for this type of loan, you should have the proper documents ready in case the lender needs them: 

  • Proof of a regular pension 
  • Proof of funds received from children working locally or abroad 
  • Proof of income if available
  • Identity Card Proof

Given that every lender has a different set of needs, these might not be the only documents that you need to prepare. You must remember to deeply enquire about the needs if you want to know what the specific lender needs in terms of qualifications.

Personal Loan Eligibility for Pensioners

When it comes to being qualified for a personal loan, there are some things to keep in mind. The eligibility needs for applying for personal loans for young people and senior citizens are similar. But if you keep the things in mind when making an application for a senior citizen personal loan, your loan will be accepted:

  • Each bank has a different age limit for pension loans. But pensioners can apply for personal loans for pensioners up to the age of 76.
  • The senior citizen must be Indian.
  • The senior citizen cannot be older than 76.
  • If you are applying for a loan, the monthly pension must be less than Rs 15,000.
  • Your credit score should be greater than 750.

Features of Personal Loans for Pensioners 

  • Purpose: The loan can be used to fulfil any family duties or financial needs. 
  • Processing Fees: Defense pensioners are not subject to processing fees. If not, nominal fees are charged. The processing fees are 0.50% of the loan amount plus tax, with a minimum of Rs. 500 plus tax. There are no extra hidden fees involved in processing the loan.
  • Loan Limit: A minimum of Rs. 25,000 loans are approved. The maximum depends on the type of pension and your age. Regular pensioners, family pensioners, and defence pensioners get loans at different rates. The loans can be approved up to Rs. 14 lakhs.
  • Repayment: The loan must be paid back through standing orders. It debits the pension account on the given date with the amount of the EMI.
  • Margin: The pension loan has no set margin. 
  • Guarantor: The spouse who qualifies for the family pension must act as a guarantor. If the spouse is not present, any other family member can serve as a guarantor.
  • Interest Rate: The interest rate on the pension loan is at the bank’s discretion. It varies based on the person’s loan amount request, repayment terms, etc.

Does One Need Collateral? 

Collateral refers to the security you give the lender so that the loan application will be approved quickly. If you are unable to make your loan payments, the collateral will act as a backup option. 

The collateral serves as the lender’s means of loan security. The lender has the right to take the collateral. They can use the money to pay off any loans they were unable to make. Both the lender and the borrower benefit from having collateral. In this situation, you will be needed to make the debt payments to recover the pledged collateral.

It will speed up the application process if you don’t have a pension. If you can offer something as security for the loan, the chances of being approved are higher.

What If One Doesn’t Have Collateral? 

If you do not have collateral, your application is likely to be rejected. If you are not able to offer collateral or have no pension, some lenders demand a guarantor. To speed up the approval of the loans, you can ask your children or other family members to serve as guarantors.

Benefits of Personal Loans for Pensioners

  • The primary benefit of personal loans for pensioners is that the person has instant access to funds. If you need money right away and meet all of the requirements, your application can be approved quickly.
  • Second, lenders are more lenient toward senior citizens who qualify for personal loans. For example, if you currently get a pension, you can use it to secure approval from the lender.
  • Third, unlike large loans such as car loans, business loans, and home loans, personal loans are easier to apply for. It’s similar to a salary loan, but the funds you can get are larger. 
  • Finally, personal loans are simpler to pay back. You will be given payment options for the loan. It includes a payment schedule and method.


Personal loans for pensioners allow retired seniors to easily manage money crises. You should check the lender’s terms and conditions. You should use personal loan eligibility calculators and EMI calculators to measure the total value of your loan.

You can visit the Piramal Finance website to get more details related to personal loans for pensioners. You can also explore their products and services.