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4 Destructive Loans to Avoid in Retirement

By Margaret Manning July 23, 2013 Managing Money

Women over 60 are often trying to take care of so many people in our lives – we give of ourselves, our time, our talents, and our money. Whether that means buying gifts for grandchildren, supporting a spouse who might have lost a job, or even supporting grown children who have trouble finding a job or affording a house, many women over 60 are generous to the point that we forget to look out for ourselves first.

If you are finding yourself in some kind of financial trouble, there are many companies who would love to talk to you. Unfortunately, there are some bad actors in the financial services industry, and not all loans and financial products actually work to your benefit as a consumer.

If you need to borrow money, whether it’s for emergency expenses or a one-time purchase or just to get by while waiting for a new job or the sale of a home or some other influx of cash, there are a few types of loans that women over 60 definitely need to avoid. Here are a few types of risky loans to avoid if you need to borrow money:

Payday Loans

With payday loans, the lender gives you an advance on your next paycheck, in exchange for a fee. The trouble is, if you fail to pay off the loan, the fees can skyrocket quickly. Some states in the U.S. have imposed strict restrictions on payday loans, and the payday loan offices are often in less affluent parts of town – showing that many of these companies are specifically trying to target a less educated, less wealthy demographic that is often more financially vulnerable. Avoid payday loans.

Car Title Loans

This is another form of a personal loan, where you borrow a small amount of money with a 30-day repayment period, and you put up your car title as collateral. It might sound like a fair deal, but the truth is, car title loans are risky. The interest rate tends to be very high, and you risk losing your car if you fail to repay – all for a relatively small amount of money that is often much less than the value of the car.

Car title loans are another type of loan where many states and municipalities in the U.S. have imposed limits on this type of loan, or even made it illegal for car title lenders to do business there. (Car title loans are different from “car loans,” which you use to buy a car. Car title loans are only issued for cars that the owner already holds the title to and owns “free and clear.”)

Tax Refund Loans

Some companies in the U.S. offer a tax refund loan, where you can borrow against the expected amount of your tax refund. The drawback of a tax refund loan is that they often charge a high rate of interest, as well as additional upfront fees. You’re probably better off working with a good accountant to minimize your tax bill, rather than relying on a tax refund loan.

Cosigning on a Loan

Cosigning on a loan happens when you don’t have good enough credit to get approved on your own, so you cask a friend or relative to “co-sign” and share the obligation to repay the debt. Co-signing on a loan can be the riskiest financial move of all – not just for the money, but for the risk to your relationship.

In case you fail to repay the loan, your co-signer is just as equally obligated to repay, so collections agencies can go after your friend or relative just the same as you. Think long and hard before co-signing or asking someone else to co-sign on a loan.

Take Care of Yourself First

While it is not always possible to plan for every contingency, and true emergencies do happen, there are several things that every woman over 60 should do to improve their financial resilience.

First, make sure that you have several months’ emergency money stashed away for a rainy day.

Second, reduce your daily costs so that life’s inevitable bumps don’t knock you off course.

Third, reduce your debt and maintain a good credit rating so that you never have to turn to risky loans.

Finally, and most importantly, take care of yourself before helping your family. Be honest about your financial situation and don’t help others if you can’t afford it. As they always say on an airplane, “put your own oxygen mask on first, before helping others.”

Do you know anyone who has gotten into a financial agreement that they later regretted? What happened, and what did they learn from the experience? Please add your comments below.

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The Author

Margaret Manning is the founder of Sixty and Me. She is an entrepreneur, author and speaker. Margaret is passionate about building dynamic and engaged communities that improve lives and change perceptions. Margaret can be contacted at

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