It is not always easy to take out a loan. Before making a decision on the application, the bank first checks the creditworthiness of the potential borrower. The employment contract plays an important role here: the financial institution sees this as sufficient evidence that the borrower can repay the liability. However, this only applies if the contract is for an unlimited period.
Low earners and temporary workers have a hard time
If the requirements are met, the loan with an employment contract is usually approved without any problems. The situation is different if the applicant can only show a temporary employment contract or is a temporary worker. For the bank, this means that the solvency initially determined may suddenly no longer exist and the repayment is at risk. Not all credit institutions want to take this risk. For this reason, temporary workers and workers with a fixed-term contract are often rejected.
Even low-income earners have a hard time. However, there are still ways to get funding. For example, the loan with an employment contract is often also granted to employees with a limited employment relationship if the period in question is before the employment relationship expires.
Creditworthiness also plays a role
However, it is not just the type of employment that plays a role in the loan with an employment contract. Proof of salary and copies of the contract are not sufficient to approve the application if negative entries can be found in the Credit Bureau information. Since these are only deleted three years after they have been resolved, past misconduct can also become a topic. However, poor creditworthiness does not lead to a categorical rejection. Many banks are willing to cooperate.
Anyone who can provide a guarantor or find a person who is willing to sign the contract together may still be able to conclude the loan with an employment contract. The decision of the financial institution is largely based on the individual financial situation of the respective third party. Alternatively, other collateral can also be provided. It is important not only to consider life insurance, but also assets owned by the borrower, such as savings, shares or real estate.