Loan with a time contract is a particular challenge when it comes to lending. Collateral for lending can hardly be derived from the employment contract alone. So the problem can only be solved in other ways. The article provides more information on temporary employment contracts and credit.
Loan with a fixed-term contract – poor conditions for credit approval.
A loan with a time contract can only be easily approved in a few cases. Temporary contracts are an instrument that was created to enable more flexibility in the labor market. Actually, it is a generally welcome idea to be able to hire someone for a limited period of time. On the one hand, this opens up the possibility of representing the pregnancy. But also long-term illnesses of a worker, which are easier to compensate for the employer. Unfortunately, the instrument also leads to misuse.
With all understanding for the meaningfulness of temporary contracts, they have an effect on the lending. The employment contract plays a very special role in securing a loan. It is labor income that creates the basis for creditworthiness in almost all cases. A temporary contract only allows temporary protection. The reactions to the credit check by the clerk are accordingly hesitant. While he still has a margin of discretion with smaller loan amounts, large financing is extremely problematic.
Which loan contracts can be approved despite a temporary employment contract?
There are long-term and short-term contracts. For example, executives are often hired on a project basis. Your temporary employment contract often extends over the course of the project over several years. In addition to an exceptionally good income, it is precisely this long period that leaves plenty of scope for loans. Those who earn well can pay off in high installments. With a project period of several years, there is hardly any problem with larger sums of funding. The credit period can easily be within the contract.
It becomes more difficult with temporary contracts that only last a few months and offer only a “normal” income. It is extremely difficult for a bank to do this, even if it can be proven that the temporary contract is regularly extended. Without additional collateral, a loan with a temporary contract can hardly be approved. It is therefore advisable to offer additional property collateral, for example the motor vehicle letter, to secure loans. If the bank does not agree to this either, a guarantor could solve the problem. The guarantee of a solvent guarantor can eliminate almost any credit obstacle.