AZE.US
Some banks in Azerbaijan are offering consumer loans to borrowers up to the age of 73, in some cases without requiring a guarantor or life insurance.
Banking expert Emin Karimov said the practice usually applies to pensioners who receive their monthly payments through the same bank issuing the loan.
Repayments are deducted directly from the borrower’s pension card, reducing the lender’s collection risk.
“Providing a loan through the bank where a person receives their pension is normal practice,” Karimov told Demokrat.az. “However, additional safeguards would be more appropriate in such cases.”
He said banks could require life insurance or at least one guarantor when lending to older customers.
Karimov noted that financial risks become higher for borrowers over the age of 70 to 75, particularly when loans are issued without additional security.
“This does not mean assuming that someone will die,” he said. “But financial risks must be properly managed.”
A relatively inexpensive life insurance policy could protect both the bank and the borrower’s family, he added.
Karimov said a similar model could eventually be considered for mortgage lending.
Mortgage repayment terms in Azerbaijan are generally structured so that the borrower repays the loan by the age of 65. With insurance coverage, Karimov said the limit could potentially be raised to 75.
A longer repayment period would reduce monthly installments and could make mortgages more affordable.
He also suggested increasing the maximum mortgage loan amount from 150,000 manats ($88,235) to 200,000 manats ($117,647).
Karimov said the proposal could first be tested as a pilot program. If successful, it could later be extended to other lending products.
AZE.US