Best Personal Loan for Pensioners

16 Jun 2021 4 min read
Personal Loan: Best Personal Loan for Pensioners at lowest Interest Rate

The banking and financial system in India has considerably transformed itself. Not only they have flexible policies and features for the customers but now the banks and NBFCs extend their loan schemes to the retired people and pensioners as well. The pensioners can now easily apply for the personal loan online and can fulfill their aspirations or meet the financial needs in case of an emergency.

The pensioners' loan offered by bank allows the pensioners to take the loan against FDs, pension, National Saving Certificates, etc. Despite many banks and financial institutions reluctant to give the loan to the pensioners, some of the prominent banks like State Bank of India, Dena Bank, Bank of Baroda, PNB, etc. provide the personal loan to the pensioners quite easily. One can check whether he will get a personal loan for pensioners by clicking here.

In this blog, we will discuss in detail about the personal loan offered by banks to pensioners. Although eligibility criteria for most of the banks remain the same, the interest rates may vary from one bank to another. Here is the detailed list of the same:

Benefits of Personal Loan for Pensioners

Life after retirement is not easy. Though pension is a regular means of income for the retirees, any emergency situation or a cash crunch can turn their finances upside down. And for the pensioners, it is even more important to maintain enough savings. So, in case of a small cash crunch, a personal loan for pensioners comes in handy.

Some of the benefits of such personal loans are mentioned below:

✔️ No Collateral Needed- The valuable assets of the pensioners remain safe if they opt for a personal loan to meet a financial emergency. No collateral is required to be pledged for a personal loan.

✔️ Lower Interest Rates- Most of the lenders would allow the pensioners to take loans at a lower rate of interest. So, pensioners might as well get the benefits of a low-interest secured loan without having to risk any of their assets.

✔️ Variety of Usage- The usage of personal loans is not limited to the purpose for which it was taken. The loan proceeds can be used to fund various needs. Bank does not monitor the usage of funds as long as you don’t use it for illegal or speculative activities.

✔️ Easy Documentation- Being an unsecured loan, personal loans entail lesser and easier documentation. The applicants are required to submit only proof of identity, address and income. Income proof in case of pensioners would be the bank statement that shows regular pension being credited into their accounts. The documentation is even simpler when retirees apply for a loan from the bank where their pension is credited.

✔️ Quick Approval- Personal loans are the quickest loans in the market and this is why they are preferred in case of emergency. And as we have mentioned above, the approval will be quicker if the pension account of the borrower is in the same bank. The disbursal could be done within 3 working days.

Things Pensioners should keep in Mind before Applying for a Personal Loan

Pensioners should be extra cautious while getting any type of loan as the only regular source of income for them is the pension. In light of this, here we have enumerated some important points that retirees should consider before applying for a personal loan:

✔️ Borrow as per your need and not as per your eligibility

You may be eligible for a higher loan amount but you should consider borrowing an amount that you actually need. If you take a high loan amount than needed, you will still have to pay interest on the extra amount. To save yourself from incurring this extra cost, you should assess your need properly and then apply.

✔️ Shop around for the right deal

The first offer you get may be good but you should definitely shop around for better rates and better terms and conditions. Unless you have two or three options at hand, you cannot compare to find the best one. Firstly, you should go to the bank with which you already have a relationship. Then move on to explore more options.

✔️ Assess the overall cost of the loan

A personal loan is not just about the interest rate. There are several other costs involved in this borrowing such as the processing fee, prepayment charges, late payment fee, etc. Leaving the interest rate out, the processing fee is the second most important thing that you should look at. Usually, the processing fee is 1% to 3% in the case of pensioner’s personal loan. You should always look for a lower processing fee. The next thing to consider is the pre-payment penalty and the terms associated with it. Your bank may not allow prepayment for a particular time period and when it does, it may charge an extra fee on the prepaid amount. So, if you plan on foreclosing the loan, you should keep these charges in mind.

✔️ Check your credit score before applying

Your credit score plays a major role in grabbing you the right personal loan deal. Being a pensioner, if you have a good credit score, your chances of approval will be high. With a good score, you can also avail a higher loan amount. If you have some time on hand before applying, you can work towards improving your CIBIL score. This can be done by making regular payments towards existing loans and credit cards.

✔️ Consider the alternatives

Although personal loan is the easiest to get and does not require any collateral, it is also among the most expensive loans to get. Hence, you should consider the alternatives such as loan against fixed deposit. Loan against FD allows you to get the loan and at the same time, the fixed deposit will keep earning interest. If you have a home loan, you can take a top-up loan on it. This will allow you to get the loan at lower rates and at the same time avail tax benefits.

✔️ Avoid add-on offers on loans

Once you have taken a personal loan, you should avoid taking any extra offers on it. Sometimes, the bank would pitch their other products along with the loan such as insurance. What they do not tell you is that the loan premium will be added to your loan EMIs thus increasing your financial burden. Avoid such offers at all costs.

Use Bajaj Finserv Personal Loan EMI Calculator at

Before you sign on the dotted line, you must do thorough research. A good way to find out the right combination of amount, tenure and interest rate is to use an EMI Calculator.

Most of the banks have their own personal loan EMI calculator available on their website. You just have to enter the loan amount, tenure for which you would like to take the loan and the interest rate that you think you can afford. After this, when you calculate, the tool will show you the EMI that you would have to pay per month along with the total interest that you would have to pay on the loan at the given rate of interest.

You can check the EMIs for different loan amounts and interest rates to arrive at the right deal.

Why use the EMI Calculator?

  • It gives you fair insight into the personal loan offers.
  • It allows you to compare loan offerings from different banks.
  • The tool is free of cost and can be used as many times as you want.

1. State Bank of India Pension Loan

State Bank of India- SBI is one of the leading government banks in India that also offers personal loan to the pensioners. The bank extends the loan to retired Central and State Government. The objective behind this loan is to help the pensioners meet financial needs.

Processing Fees: The defense pensioners are not charged any processing fee. For others, the processing fees can be up to 0.5% of the loan amount plus taxes. This minimum processing fees charged by SBI is ₹ 500 plus taxes.

Loan Limit: Minimum Loan Amount – ₹ 25,000

Maximum Loan Amount - ₹ 14,00,000

Interest Rate:  13.05% per annum.

Repayment Period- Before the pensioner reaches the age of 75

Eligibility for SBI Pension Loan:

  1. The pensioners should not be more than 76 years
  2. Central and State Government retired professional can apply for this loan
  3. Retired Central and State Government employees

2. Central Bank Of India Pension Loan

Central Bank of India – This leading bank provides personal loan to the pensioners and retired professionals. Central Bank of India offers a lucrative interest rate and there are no processing fees thus making it easy for the pensioners to avail the loan.

Processing Fees: There are no processing fees

Loan Limit: ₹ 5 Lakhs for the pensioners who are below 75 years and ₹ 2 Lakhs for the pensioners who are above 75 years.

Interest Rate:  11.70%

Eligibility for Central Bank of India Pension Loan:

1.    The pensioners should be drawing a pension via Central Bank.

3. PNB Pension Loan

Punjab National Bank – PNB is known for providing a range of loans and financial schemes to the people. The bank provides personal loan to the pensioners and retired professionals. PNB offers a lucrative interest rate and there are no processing fees thus making it easy for the pensioners to avail the loan.

Processing Fees: There are no processing fees charged by the Punjab National Bank but it does charge ₹ 500 as documentation charge.

Loan Limit: Minimum ₹  25,000

Maximum – For pensioners who are up to 70 years of age- ₹ 10 Lakhs

For pensioners who are above 70 years - ₹  7.5 Lakhs

For pensioners who are above 75 years - ₹ 5 Lakhs

Interest Rate:  2.60% above the MCLR.

Repayment Period- 60 EMIs for those who are below 75 years of age and for those who are above the age of 75, the bank allows 24 EMIs

Eligibility for PNB Personal Loan for pensioners:

The pensioner should be drawing pension via Punjab National Bank

4. Bank of Baroda Pension Loan

Bank of Baroda Loan to Pensioners- Bank of Baroda is one of the leading banks providing loans and other financial products to the individuals looking for financial help.

Processing Fees: There are no processing fees for the pensioners and family pensioners of BOB but others are subjected to pay the processing fees of ₹ 1000

Loan Limit: ₹ 8 Lakhs for the pensioners who are below 70 years and ₹ 1.5 Lakhs for the pensioners who are above 70 years.

Interest Rate: The base rate plus 2.00% p.a.

Repayment Period- 77-78 years of age

Eligibility for Bank of Baroda Pension Loan:

  1. Pensioners should be drawing a pension from BOB
  2. Family pensioners of BOB
  3. The age of pensioners should not be more than 75

5. Bank Of India Pension Loan 

BOI- The Bank of India or BOI offers Star Pensioner Loan Scheme to the pensioners. Pensioners drawing their pension from Bank of India or are retired employees of Bank of India is eligible to get a personal loan from Bank of India.

Processing Fees: There are no processing fees charged from pensioners who are above the age of 60. Pensioners who are below the age of 60 are charged a processing fee of 2% of the loan amount.

Loan Limit: Bank of India offers loan between₹ 3 Lakhs to ₹ 5 Lakhs. The family pensioners can get the loan of ₹ 1.5 Lakhs

Interest Rate: 2.00% + BSS (0.30%) over 1 Year MCLR

Repayment Period- 60 EMIs

Eligibility Criteria for Bank of India Pension Loan

  1. Retired Bank of India professionals
  2. Family pensioners from Bank of India
  3. Pensioners drawing pension through Bank of India branches

Documentation for Personal Loan for the Pensioners-

The documentation for the banks remains almost the same. Following are the documents that you would require to produce at the time of personal loan application:

  1. ID Proof- Pensioners need to submit Voter Card, Aadhaar Card, Passport, etc.
  2. Address Proof- In order to submit your address proof, the bank will ask you to submit utility bills or telephone bill, electricity bill.
  3. Latest 6 months bank statement
  4. Proof of retirement and proof showing the details of your last employer.
  5. Pension slip    

As mentioned above, banks have already become very flexible when it comes to providing personal loan to the pensioners. Apart from the above-mentioned banks, there are other banks that offer personal loan to the pensioners. Most banks have set an upper age limit of 75 years while others restrict the age to 70 years. The personal loan not only helps them to meet their needs but also their aspirations and wants.

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Best Bank For Pension Loan 

Aditya Birla Personal Loan HDFC Personal Loan ICICI Bank Personal Loan Axis Bank Personal Loan
Bank Of India Personal Loan IndusInd Bank Personal Loan Fullerton India Personal Loan TATA Capital Personal Loan
Capital First Personal Loan RBL Bank Personal Loan PNB Personal Loan Vijaya Bank Personal Loan
Bank of Baroda Personal Loan Uco Bank Personal Loan Mahindra Finance Personal Loan Oriental Bank Personal Loan

Personal Loan Blogs :

➤ Document Required For Personal Loan

➤ SBI Personal Loan for Government Employees – Eligibility, Interest Rate

➤ How to Qualify for a Personal Loan with Your First Job?

➤ Personal Loan for Low Salary Professionals

➤ Personal Loan for Jobless/Unemployed people?


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