Obtaining credit and finance is a rigorous process, with various necessary checks and balances and potentially lengthy application processes.
Particularly for those that have little to no credit history and past dealings, acquiring finance can sometimes prove next to impossible. For those more advanced in their credit practices and years though, like the over 40s, there are many options, both secured and unsecured and there are many places from which to select the finance option that most suits (source: Money Savings Advice).
The over 40s as a demographic are often appealing to lenders and providers of finance in a way that under 40s and certainly those under 30 are simply not so.
When it comes to personal finance, the likes of payday loans, credit cards and logbook loans will typically be of interest to those in all age groups, but usually with a hefty price tag attached in the form if interest and loan charges.
However, ‘gold standard’ options like bank loans, mortgages, second mortgages and more affordable rate of finance are usually reserved for those over 40 as well as those with particularly appealing credit characteristics.
Why the over 40s?
There are various credit practices that are widely accepted by lenders and the credit reference agencies to be good for your credit rating. Thus, undertaking these practices and building good habits when it comes to credit is crucial for everyone over the course of their lives. The over 40s however, unlike those of younger ages and less credit experience will have established practices and merits, having built these up over their lives.
Crucially, over 40s will more than likely have had loans and credit agreements which the vast majority will have paid off as well as other debts which they will be very much in the swing of repaying. What makes this important is that lenders such as banks and others as well as credit reference agencies like Equifax, Callcredit and Experian will be able to see the pattern of desirable credit behaviour.
For lenders, it ultimately comes down to risk. Therefore, if an applicant shows a pattern of repaying their loans and debts in a timely and comfortable manner, they are a much more appealing lending prospect than someone about which they can deem very little.
Key to the over 40s is that many of this age group will own their own homes and other assets. Under 30s for example are more likely to be in rented accommodation and therefore will have fewer assets of high value. For a lender, just the knowledge that a borrower owns their own home is positively looked upon. Ultimately, if someone owns a property, they are more likely to be able to repay other debts; being well-attuned the needs of servicing a loan, having done so with a mortgage.
Homeowner loans are very different
For those who own their own homes, they can, in the eyes of lenders, always fall back on that as a high value asset and collateral for the loan in question. Also, loans that are secured against an asset as high value as a property, will be of greater value and will run over a longer period of time than the likes of unsecured personal loans like payday loans.
Thus, the options for homeowners will include home improvement loans (find out more), second charge mortgages and run-of-the-mill first charge mortgages and remortgages. These loans are of course of a much higher value due to the amount funded by a lender and the interest over time will make them more money.
With regards to other loans for those that have less-established credit practices and who do not own their own homes, the options will for the most part include the likes of emergency loans should they require as well as other high-cost short term loans. Credit cards are also a popular option for those who need access to credit in the short to medium term.
With unsecured loans like most personal loans, there is nothing for the lender to fall back upon should the borrower default on the loan. Hence, the risk for lenders when it comes to secured loans like mortgages, is far less and so the rates and repayments will tend to be more favourable, albeit for a larger loan amount.