Some seniors experience financial hardship resulting in bad credit ratings. This limits the type of loan for which some seniors are approved. Unsecured or signature loans are considered higher risk financing. Seniors with bad credit history, lower FICO scores and/or higher debt-to-income ratios might not qualify for unsecured loans. Secured loans help seniors get the funds they need for a variety of purposes because secured loans use collateral to guarantee repayment.
Senior citizens are presumed to have significant amounts of viable collateral. This might not be the case for seniors who previously put up collateral for loans needed to survive the 2008 recession. For those who were able to survive that crash using SSI, pension funds and savings accounts, a new secured loan might be a plausible way to get through current financial hardship.
Not all seniors need financing help due to bad credit or depleted savings accounts, however.
There are many reasons people, including senior citizens, need financing during significant times or changes in their lives. Secured loans help seniors get the funds they need for a variety of purposes.
They are available for home improvements, long-term care expenses and medical bills not covered by Medicare/Medigap. Funds from secured loans are sometimes used to consolidate debt from several other accounts into one lower monthly payment with a lower APR.
Secured loans also help alleviate financial hardship caused by personal emergencies or COVID-19-related issues. Additional reasons seniors need secured loans include:
- Financing long-term care facility expenses.
- Home improvements or renovations.
- Paying for an extended dream vacation.
- Funding for short-term physical therapy or hospice care when recovering from accidents, surgeries or other medical issues.