Personal loans for invalidity pensions: how do the banks behave in these cases?

Generally, the disability condition is not considered a discriminating factor for the granting of a loan by a bank, as it is not analyzed during the preliminary investigation phase; however, sometimes it could be a problem since it cannot be attacked in the event of insolvency and this is the case in which the applicant finds himself having a disability pension.

Assuming that the requests for loans from an invalid pensioner vary from bank to bank and from pathology to pathology, further clarification will be provided below on the question of the request for financing in situations of disability, already analyzed other times within this guide; in particular, we will focus on the problems present for an invalid pensioner along the process of applying for a loan.

IN WHAT CASES IS THE INVALIDITY PENSION GIVEN?

IN WHAT CASES IS THE INVALIDITY PENSION GIVEN?

Before going into the discourse of loans to pensioners with disabilities it is appropriate to make a clarification, namely: in which cases is the disability pension granted?
According to the law n.222 of June 12th 1984, which came into force in July of the same year, all the disabled must be paid a welfare form, called a disability pension.
This form of assistance is granted to the disabled, the Czechs, the deaf and dumb, the self-employed and employees who are unable to do their jobs.

For the entitlement to a disability pension to be triggered, it is necessary for the subject to have abilities reduced by at least one third and permanently. In practice, the invalid, physical or mental, must have a work incapacity of between 67% and 99%, once this threshold is exceeded, the subject is declared unfit. Moreover, all those who have difficulty walking or performing daily activities are entitled to an accompanying allowance.

Furthermore, the invalidity pension is granted to those who have paid a minimum of five years of contributions.
The disability allowance has a duration of three years and can be renewed by applying by the interested party, following a forensic medical examination. The invalidity pension can be granted that while the invalidity’s working activity is in progress and in this case the medico-legal visit will be made only once a year.

Once the retirement age is reached, that is, at the age of 65 for men and 60 for women, the disability allowance becomes an old-age pension. In this case, twenty years of contributions are required, alternatively, the years in which the disabled person received the disability allowance even though they were not working would also be counted.

WHAT ARE THE REQUIREMENTS THAT AN INVALIDITY PENSIONER MUST HAVE TO SUBMIT A FINANCING CONTRACT?

WHAT ARE THE REQUIREMENTS THAT AN INVALIDITY PENSIONER MUST HAVE TO SUBMIT A FINANCING CONTRACT?

As with all cases of loan applications, the main factor, for a loan to be accepted, is undoubtedly the fact of having repaid all previous disbursements of money ; another important factor is the respect of the maximum age limit established by the bank.

Having secured these two requisites, to obtain the granting of a loan, an invalid must demonstrate a monthly personal income that is continuous and sufficient to guarantee the absorption of the impact of the installment on his own standard of living.

Consequently, the condition of disability does not preclude at all access to financing, since, the only clause is that of having to be able to repay the entire loan.
However, there are cases in which the pathology or the stage of disability could lead to a certain death so the bank could refuse to accept the loan request, as the disappearance of the borrower would be a default for the creditor financial institution.

IT MAKES A PRACTICAL EXAMPLE

Take as an example the case in which a pensioner with disability decides to apply for a loan; the pension he received is $ 800 per month. Under these conditions, the bank can draw up an ad hoc personal loan, with a repayment ranging from $ 200 to $ 250 each month: in this way, the creditor institution ensures the repayment of the money lent, but at the same time guarantees the debtor a standard of living at acceptable levels.

In general, the principle holds that the amount of residual monthly pension, compared to the net of the loan installment, must correspond to an amount exceeding approximately $ 500 : the quota may vary from one bank to another.

WHAT ARE THE WAYS IN WHICH AN INVALIDITY PENSIONER CAN REFUND TO THE BANK THE LOAN RECEIVED?

WHAT ARE THE WAYS IN WHICH AN INVALIDITY PENSIONER CAN REFUND TO THE BANK THE LOAN RECEIVED?

As we have seen, pensioners with disabilities can pay the bank or any credit institution simply by selling part of the pension, with a proportion that allows them to live with dignity.
Furthermore, those with disability pensions can also take advantage of the loan against the assignment of the fifth, assigning a portion of the disability (or disability) allowance they receive to be included in the IO category.

Usually, the assignment of the fifth for the repayment of the loan is granted to pensioners on the basis of the invalidity pathology attributed to them ; the severity of death is one of the factors that greatly affect the acceptance or non-acceptance of the loan request: since the loan is protected by an insurance policy, the disability must not reach a stage that causes the death of the applicant.

To sign the loan contract, civil invalidity pensions and social allowances are not valid, as well as monthly allowances for assistance to disabled pensioners.

WHAT ARE THE DOCUMENTS THAT SHOULD PRESENT A PENSIONER WITH INVALIDITY TO MAKE A FINANCING REQUEST?

WHAT ARE THE DOCUMENTS THAT SHOULD PRESENT A PENSIONER WITH INVALIDITY TO MAKE A FINANCING REQUEST?

The stage of disability is a factor determined for the granting of a loan, precisely for this reason, the applicant must present all the appropriate medical documentation attesting the invalidating reasons, in such a way as to allow the credit institution to evaluate and proceed with the financing practice.
The medical documentation is then not analyzed by the bank, but by the insurance company that assumes the risk of entering into the life insurance contract.

WHY DO THE BANK REFUSE TO GRANT A LOAN TO A PENSIONER WITH INVALIDITY?

WHY DO THE BANK REFUSE TO GRANT A LOAN TO A PENSIONER WITH INVALIDITY?

There are cases in which the bank refuses to grant a loan to a pensioner with a disability; these are the cases in which the applicant’s pathology can determine the death of the same by little, therefore the bank does not assume the risk of default.

There are cases in which a financial institution is not accepted by a bank; these events concern rare cases, for example, when a pensioner with disability decides to pay a good, paying the total amount: many times, in these cases, the loan is not granted, because the disability pension does not appear to be liable in cases of insolvency.
The insecurity of the invalidity pension is given by the fact that, in many cases, it is a social pension and in the event that the pensioner could not pay one or more mortgage repayments, the loan provider could never claim on the same.

There are very specific reasons why, in some cases, the bank refuses to grant a loan to a pensioner with disabilities, or the following:

  • because it (sometimes) is small
  • because it is unsafe so it is possible that for any reason it may be suspended or eliminated, due, for example, to a termination of invalidity following an social security check.

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