Having an open-ended employment contract is a real blessing for upcoming loan applications for both the bank and the applicant. However, if you apply for a loan without a permanent employment contract in this context, it will be difficult for you to obtain the desired loan. The temporary employment means that there is no important security for the bank.
Information about the employment contract
As a rule, credit institutions require the potential borrower to provide the last three pay slips to prove regular income. In addition, they initiate a Credit Bureau request to ensure that the borrower has no credit rating difficulties or does not meet his previous payment obligations. Despite these extensive information options, a bank does not find out for data protection reasons whether the customer has a fixed-term or open-ended employment contract.
The request to present the employment contract is possible in principle, but is practiced by hardly any bank due to the seriousness of its founders. There is obviously an advantage for consumers at this point. In order to avoid this unpleasant circumstance, the applicants have to fill out a questionnaire, which sometimes asks for the relevant employment relationship. If wrong information about the duration of employment is deliberately given here, legal consequences of various kinds are to be expected with high probability.
Additional guarantees will help
In the case of a loan without a permanent employment contract, lenders usually require the submission of additional collateral that reduces the risk of loss to the lowest possible level. Consumers who want to use the loan without a permanent employment contract, for example to finance an object, automatically provide the bank with a security object and thus the best possible protection against the lender.
If payments fall due over a period of two to three months, the bank can seize the property and thus compensate for the loss of capital. A car or property is therefore more often given to employees with a fixed-term contract. Borrowers also have a better chance of working in a profession that is in demand on the job market at the time of application. Under these conditions, the loan is also approved without a problem without a permanent employment contract.
The loan terms
Donors assume a higher risk of loss in the case of a loan without permanent employment. For this reason, a higher interest rate is usually estimated on the loan. Any offers with a strikingly low interest rate are only representative examples in the area of the “feasible”.
The applicant will only find out which interest rate is actually charged for a loan without a permanent employment contract on site or according to the information provided. Nevertheless, it is important to always compare the conditions of different financial service providers. Despite the difficult circumstances, there is great savings potential.