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Older borrowers struggle to get loans

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One in five people over 50 have applied for a loan in the last three years but this age group is poorly catered for by lenders, according to Saga Money. 

The company said lenders applied “inflexible acceptance criteria” such as arbitrary age limits for borrowers.

It said people who are able to pay off a loan are often not offered one, simply because of their age or the amount they earn on a pay slip, regardless of how much income they might have from other sources.

If lenders do accept older borrowers, they tend to offer much higher rates, Saga said.

The firm criticised the loan market in the UK in general, saying it is “not fit for purpose”.

It highlighted the practice of offering teaser rates to tempt people into applying for a loan, only to be hit with a much higher rate on application.

Saga research found the average of the top 10 lowest advertised rates on the market suggest loans are available with an APR of as little as 3.23%, but typically applicants said they were more likely to be offered an APR a little over 8%.

Nici Audhlam-Gardiner, managing director, Saga Money, said:Our customers have told us they have a clear need for borrowing later in life, whether that is for home improvements or to pay for children’s education, and they are finding it frustrating to be turned down because of their age or offered rates much higher than the one they applied for.

“These are often people with a pension or investment income or part time earnings who are able to cope well with loan repayments, but find themselves shut out of the market, because only their pay slip is being taken in to account.

“It is time the market changed with evolving lifestyles.”

Saga has launched a single rate loan with acceptance criteria tailored specifically for people over 50.

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