Pension Backed Loans

For many people the idea of securing a loan can be both a daunting prospect and an impossible goal. Thankfully, there is hope for people struggling to make financial ends meet. Today many people are applying for pension loans. It can be seen as a fast and easy way to get money. People are choosing a pension loan for a number of reasons but before we look at those, let’s first consider what a pension backed loan really is.

A pension loan is, in a way, a sort of a secured loan. It is easier to get approval for a pension loan than it is for a traditional loan. Why? You are able to use your pension as a form of collateral. For many people, this is the only collateral they have to offer or want to make available, so it makes for an inviting idea. You also have two options when securing a pension loan that traditional loans do not give you. First, you have the choice of repaying your debt before the date of maturity arrives. Secondly, you can also allow the lending party to take your future pension payments.

Are the benefits of a pension loan much better than a traditional one?

With a pension loan, you don’t have to have an excellent credit rating to get your hands on one. If you have great credit, sometimes getting a traditional loan can be the way to go. Conversely, if you don’t have good credit rating, pension loans can give you flexibility. With an unsecured loan, your interest rates can generally be very high. The interest rates for a secure pension loan will be significantly lower. Repayment for an unsecured loan takes a long time, while repayment on a pension loan is far speedier.

The higher an interest rate is, the longer it is going to take an individual to secure their loan. There are many hidden fees and miscellaneous costs that are included in the principle balance. Pension loans can be quite different. You can often get a loan today –  sometimes just about right this second! Why? You have immediate collateral for the loan: your pension! The collateral, of course, is used in case you default on your payments. So please, before applying for ANY loan, do your sums and make sure you can repay the amounts quoted and be happy with any future commitments offered.

There are many organisations that provide pension loans of up to 50% of someone’s future pension payments. In addition to this, you may also choose how much of your future pension payments the lender may take away each month.

What are some of the benefits of securing a pension loan?

One of them is privacy. You retain the right to keep the reasons for the loan completely to yourself. Of course the reason should be reasonable and within the law, but the promise of secrecy is a big draw to pension loans – people don’t have to worry about their personal reasons being exposed. Three reasons you may be considering to secure a pension loan for yourself is if you need money for debt consolidation, to pay the simplest of bills or to rid yourself of mortgage payments.

Another one of the many benefits of a pension backed loan is that they can be the perfect way to fund a business. Whether you are planning to go into the restaurant industry or the insurance business, a pension backed loan can make securing funds for your venture much easier. It is an outstanding source of capital. If you have a good strategy, determination, a willingness to work hard and an adequate supply of money coming in from your pension payments, you should be able to create an extremely successful enterprise. Over time you could make quite a profit by using a pension backed loan as the starting capital for your business.

Yet another benefit is the ability to use pension loans to clear out credit card debt. Everybody hates having the credit debt hanging over them. With the faltering economy sending interest rates soaring, the best thing you can do to secure the rosiness of your future is to get rid of it! With pension backed loans, you do not need to pay any interest – or money that you did not originally owe the bank. Because pension loans do not have interest rates, you are only paying back the amount of money that owed in the first place – not a penny more. You can do one of two things to avoid penalties or fees within loan. First, agree to the terms of service, or second, pay the debt before the date of maturity comes to pass.

Are pension loans easier to apply for than a traditional loan?

There are lots of companies out there offering you assistance. Find an organisation that specialises in pension loans. They will be able to give you an estimate of how much money they will be able to loan to you within a specified period of time. For example, if you need a substantial amount of cash, a small amount of your pension will be released to the lending party. If you want, you can make special arrangements that will take a year’s worth of pension payments out of your pension funds in accordance with the amount that is loaned out. You will actually begin to pay off the loan as soon as you have taken it.

Keep in mind, that with any agreement, it is a good idea to go over all of the terms and conditions. You should also be aware that in order to obtain a pension loan, there are certain terms that you will have to submit to. You will find that in order to get approval for a pension loan, most lending organisations do not use credit checks – but they do check the amount of pension that you will be receiving right now and in the future. If you live in the UK, for example, you will need about £500 pension entitlement, before any lending institution is willing to approve your loan. Remember that there are also limits to the amount of money that you can borrow. Nobody can borrow infinitely. Why is this a good thing? It ensures that you will still have pension payments coming your way once you have succeeded in paying off the loan. You don’t want to remove that form of income altogether.

Pension loans come in many different forms.

Usually this is often because they are tailored to meet the individual needs of the applicant. You can always call pension loan advisors if you have any questions that apply to your personal situation. Sometimes, if you are lending a larger amount of money than usual, you can sign an agreement to release up to 100% of your pension fund. Remember, do this only if you must. Try to preserve some of your pension throughout the loan process.

One of the best things about a pension loan is that you don’t have to have perfect credit to qualify. In fact, they are often used to pay off credit card debt, as stated previously. Another upside? You usually do not have to worry about increasing your income at all. In order to quality for a pension loan, you will have to have at least one pension – if you have more, that’s fine – with a collective value that meets the requirements of the specific lending party. It does not matter if your pension is frozen or if you are still making pension payments. Do you have an old, perhaps outdated company pension that you are still paying into? You can qualify! The diversity and flexibility of the pension loan is what often makes it so popular.

The pension loan itself is not registered with any credit reference agencies. Thus there are no credit checks needed when you arrange a pension loan. If you like the sound of that, then there’s more good news! You can feel free to repay your loan early if you wish. There will be no penalty for doing so. You will find that it usually takes anywhere from 3 to 12 weeks to complete a loan. The organisation that created the loan will keep you informed of the progress of the loan. You can feel free to ask them any questions you may have. They are also available to help you with paperwork.

Perhaps you aren’t sure if a pension loan is right for you? It’s highly recommended that you talk to a qualified financial advisor before you apply for any loan, whether it be a pension backed or traditional loan.

All in all, pension loans are a fast and easy way to obtain cash, even if you have a low credit rating. In the current economic climate, it can be difficult to obtain a loan, so pension loans are gaining popularity because of the ease with which you can quality and receive money. There are not hidden charges, no interest rates and once the loan process is finished, you’re allowed to use your pension payments in the future.