Only 23% of U.S. workers participate in a pension plan. If you have one, consider yourself lucky! Pension loans are a great way to give yourself financial flexibility and enjoy even more benefits from your pension.
With a pension loan, you can receive a lump sum payment to help you handle unexpected expenses or things you want to invest in. Build a house, take a vacation, or deal with a nagging condition – with these loans, the choice is yours.
But like any loan, if you have bad credit, it can be tough to find a lender. Fortunately, you have options. There are places you can turn to for a lump sum pension loan without any kind of credit check.
Here’s what you need to know about securing loans for people with pensions:
Understand Your Situation
The first step in obtaining a pension loan is knowing where you’re at financially. You need to decide how much money you want from a loan. It’s also helpful to have a specific plan for what you will do with the money.
Having a plan will make both you and potential lenders more confident. It will help you stay on track and use the loan funds wisely.
Next, you’ll want to know your credit score. While there are places you can go for a no credit check loan, understanding your credit score is still helpful. It lets you know what kind of loans you may or may not have access to.
Once you have figured out your goals for a pension loan and your current credit situation, you can move on to seeking out lenders.
Searching for a Pension Loans Provider
This step is probably the most important one in the process of seeking any loan. It’s especially true for pensions, which have specific guidelines and regulations. There are a few different types of pension loans to choose from.
One type of loan that you definitely want to avoid is the pension advance. Under this system, a lender gives you a lump sum loan only if you agree to pay them a portion of your future pension payments. While this idea might sound good in theory, pension advance lenders typically have hidden terms and conditions.
For example, some pension advance lenders require you to buy life insurance along with your loan. Your best bet is to find a pension provider who will give you a straight loan without requiring anything other than repayment.
When you’re looking for a provider of pension loans, take advantage of online resources. Use sites like:
- The Better Business Bureau
- Google Reviews
- The FTC
These resources will educate you about pension loans and providers. If there have been any complaints or charges filed against a lender, you can find out on one of these sites.
Narrow Down Your List
After searching online, you’ll most likely find multiple lenders that could satisfy your requirements. The next step is to create a “short list” of 2 to 4 lenders that you think could seriously fit the bill.
Ensure these lenders don’t do credit checks and offer competitive rates. Don’t get fooled by predatory lenders who give out loans to anyone but use extremely high interest rates to ensnare people. Always check to see what interest rates are available from lenders on your short list.
Talk to each lender on your list to get a feel for their style. Pay close attention to the way they communicate. Are they clear, friendly, and easy to talk to?
You want to work with a lender who is trustworthy and honest. Of course, it can be difficult to tell which lenders match these descriptions from initial conversations. Just do the best you can and trust your instincts.
The final step is to decide on a specific lender. Remember not to rush this process. You might feel like you are in a hurry to receive your loan, but getting stuck in a bad financial situation because of a hurried loan will lead to much more pain than not having the money.
After deciding on your lender, devote a little extra time looking into them. Research their website and online ratings. Talk to others who may have experience with them to find out as much as you can.
What to Expect After Choosing a Lender
Although a no credit check pension loan won’t run a credit inquiry, they will check other areas of your history. It’s not uncommon for lenders to look at things like:
- Employment history
- Criminal records
- Educational qualifications
Of course, you’ll also need to provide them with information about your pension. It’s fine to provide high-level information about your pension to help lenders understand your situation. But remember, don’t commit to giving up a portion of your pension or buying any other product to receive a loan.
You also may need to talk to the provider about your intended use for the money. While you won’t be required to go into serious detail, it will make most lenders more confident if they know you have a plan for your pension loan. You can just give them a general, high-level reason that you need the loan.
What to do After Getting a Loan
After you have agreed to all terms with your lender and submitted your application, you should receive a decision within a few business days. If you get approved for the loan, congratulations! You are one step closer to the kind of financial freedom you deserve.
After you receive the funds, make sure to do the following:
- Stay disciplined and stick to your plan. Don’t spend your pension loan on impulse purchases.
- Communicate with your lender when needed. If you think you’ll be late or miss a payment, be proactive about it.
- Try not to take another loan. If you need an additional lump sum to hold you over, try to talk to friends or family members first.
Pension Loans Can Change Your Life
Don’t feel that you are trapped by previous financial mistakes. If you have a pension coming, you can use that plan to give yourself flexibility and improve your finances with pension loans. For more information about these and other kinds of loans for those with bad credit, check out our blog.