In today’s world, it is not uncommon for employees to only receive a fixed-term contract, at least when starting a new job. This gives employers the opportunity to get an idea of the new employee before they provide them with a new employment contract.
In the event that employees need a loan during this time, difficulties can arise, as many banks are rather skeptical about a loan with a fixed-term contract. Nevertheless, it is possible to get a loan with a fixed-term contract, but there are a few points to consider when applying.
Conditions for a loan with a temporary employment contract
Anyone who has a fixed-term employment contract should compare the terms offered for a loan with one another particularly closely. First of all, you should be aware that a temporary employment contract always poses a higher risk for the bank. To secure this, a somewhat higher interest rate is usually required. Especially with banks, which make the interest rate dependent on the creditworthiness of customers, the cheapest entry interest rate is certainly not granted for a loan with a fixed-term employment contract.
It is therefore worthwhile to rely on a loan with an interest rate that is independent of creditworthiness. When comparing loans, you should also pay close attention to whether a credit institution requires the submission of the employment contract. If this is the case, a loan is usually only granted if the employment contract is permanent and the borrower has been employed by the respective employer for at least six months.
Secure your loan additionally
A loan with a fixed-term employment contract is most likely to be obtained if the loan amount is rather small or the term of the loan is still within the time limit. If this is not the case, there is still the option of additionally securing the loan. For this purpose, for example, a second borrower can be included in the loan agreement.
It should be noted that in such a case both borrowers are jointly and severally liable. This means that the bank can ask both borrowers to repay the loan amount. It is important that a complete credit check is carried out for both borrowers.
This means that both of them must have a perfect Credit Bureau and sufficient income. In addition, at least the second borrower should be in permanent employment. The alternative to a second borrower is to deposit collateral. If you own a property, for example, you can also use it as security for a loan. Wearable valuables such as jewelry or a life insurance policy with a sufficient surrender value can also be deposited with the bank as security.
Apply for a temporary employment loan
In the case of an inquiry via the Internet, this is rejected in most cases if not all of the requirements are met 100 percent. If you have a temporary employment contract and want to secure the loan with collateral, for example, you should rather make a personal request to a bank. In this case, the loan is checked individually according to the personal circumstances of the borrower.