Remember when you are in your twenties or thirties and that retirement seems like a distant future? Well, you are there now, and it looks like it will happen tomorrow. Thank God for your RRSP! You may be thinking because now you are going to use that money for what you WANT to do after so many years of work. You may be able to offer a new toy, like a brand new car. While you certainly deserve it, think about how and why to buy a new vehicle after retirement, especially if you’re considering a car loan. After all, why do you get into debt after spending your life trying to get rid of it?
Can retirees get a car loan?
With age comes the wisdom, not to mention the benefits, right? Some people assume that the older you get, the harder it is to get a loan. This is not true. And if you’re wondering if you can still qualify for a loan after retirement (which currently occurs between the ages of 60 and 67), the answer is yes, you can. But it all comes down to whether you really want it or not. Remember that a loan, in any form, is a you do not want to spend your pension funds to pay off your loans, debts, interest rates and all the fees that “workers” have to pay.
You will not want to join the ranks of the next crowd – the indebted retirees. This is the antithesis of freedom after retirement. Unfortunately, it’s not as rare as you might think. In fact, according to an article in the Financial Post, half of Canadians expect to have some debt until retirement. There are also other troubling figures. About 20% of people close to retirement rely on the value of their home to pay for their daily expenses once they leave the job market. I hope this is not the case for you, but it shows that retirees are leaving with fewer assets than previous generations. This means that you (as well as any other Canadian who is about to retire) need to think carefully about whether they want to lock themselves into a long-term commitment, relying solely on retirement.
Weigh the financial costs
Although you may enjoy a degree of financial freedom not yet known, you must nevertheless exercise caution and prudence in your money. Many of the considerations that apply to active persons will also apply to you when you leave your job. Even if you are sitting on what may seem like a fortune, you do not want to waste your money because of some careless mistakes.
At the end of the day, you always receive a pay check, depending on the amount of funding you are entitled to. The amount of money you have to work with can be less than you earned during your working years. Therefore, you must consider your other expenses against the monthly cost of your loan.
Say you still have debts to pay or that your credit score is not the best. Combined with reduced “pay”, the use of a car loan can be risky. If you retire with serious credit problems, lenders may refuse your request. And you must also make sure you prepare for bad credit. You do not want your credit score to drop over the course of life, you should be debt free.
Weigh the emotional aspects
In addition to the financial aspects mentioned above, there is the most important side of things – your freedom. Is not this what retirement is? Have the ability and flexibility to do what you want, when you want, where you want? Engaging in a long-term commitment may not be a bad thing at this point, but that does not mean you have to reduce your funds to make your payments affordable.
If you have children, they probably have grown up now. You have probably also repaid your mortgage and other loans over the years. This is not something you want to throw away! A loan can be worth it if it is a short-term contract that you can settle easily. If not, consider other options, such as leasing.
The ultimate retirement experience is that of personal freedom. When you think about it, this is the goal that all retirees look forward to. Travel, leisure, relaxation – things you did not have time to work in an office are now open to your liking. Taking a loan if it is not in your favor can make these activities difficult or impossible. Before deciding to take out a loan, think about your aspirations and plans, as well as the implication of a long-term financial commitment.
Build a plan
In the end, if you want to get a loan instead of having to pay for a car, make sure you have a plan. This is the key to getting financing that does not put your money to the test. And if things get a little complicated, you can always use this plan to stay on track or make changes.
Tips for making your plan a success
- Talk to your financial advisor first
- Review and revise your budget
- Talk to your family and family
- Consider how a long-term loan will affect other expenses, hobbies, aspirations
- Consult a credit counselor who will give you directions.
No time to be tied
Your days from 9 to 5 end. Soon, you will have hours of office to win on yoga mats, beaches and, of course, windy rides on the backcountry roads. The simple mental image of driving around a car you have always dreamed of can help you have a long day at work. But you must also think about how you will pay for a new set of wheels. If it hurts you in your life after the job, for which you worked so hard, ask yourself, “Is it worth it?” Even if a new car can fulfill a long-held dream, it should not be at the expense of life. a life without debt in your last years.