When borrowing money from a bank, both the borrower and the lender take credit risk. It is connected with the possibility of non-repayment of principal and interest installments and failure to repay the entire loan. When assessing a client’s loan application, the bank takes into account, inter alia, the age of the borrower. He must be sure that the client will live to see the end of loan repayment.
67-80 years, depending on the bank, may be the maximum age of the borrower at the time of repayment of the contract. By setting such age restrictions, banks want to limit their credit risk.
Age is one of the credit criteria
The most important credit parameter that is assessed when analyzing a loan application is the customer’s creditworthiness. It is understood as the ability to repay the liability, together with interest and other fees, on the dates indicated in the loan repayment schedule.
It is also important whether the customer has a positive credit history at the Credit Information Bureau. Negative entries indicating a significant burden in paying the loan installments mean that the bank will refuse to grant the undertaking.
Also other features may decide to grant or not to grant a loan. Place of work, occupation, length of employment as well as age are taken into account when analyzing the loan application.
Minimum and maximum age of the borrower
Pursuant to the Civil Code, a citizen obtains full legal capacity when he reaches the age of majority, i.e. at least 18 years of age. Then he can acquire rights and take obligations on his own behalf, because he has the ability to shape his legal situation independently. Therefore, in the vast majority of banks, the borrower must be at least 18 years old to be able to sign a loan agreement.
There is also a maximum age of the borrower, which applies to the period in which the borrower should fully repay his debt to the bank.
Each bank can determine the age criteria for potential borrowers, guided by the assessment of creditworthiness for effective and objective repayment possibilities of the loan.
Elderly people usually have lower monthly income than working-age people. They retire and therefore their income is lower, and the loan burden remains at a similar level. The possibility of repayment of a loan during the retirement period is a high risk factor for the bank – higher than the risk of loan repayment during the period of professional activity.
Standard for Polish banks is to indicate the maximum age of the borrower at the level of 70-75 years. The customer can reach this maximum age in the last year of loan repayment.