In most cases, anyone who starts a new job today only receives a temporary employment contract. The first time limit is then often extended again until an unlimited employment contract is issued by the employer. Anyone who needs funding during this time will find that it can be quite difficult to get a temporary employment loan.
Problems with temporary employment loan
As a rule, a loan with a fixed-term employment contract is only possible if the term of the loan does not exceed the time limit or if the amount required is rather small. A regular income is one of the basic requirements for getting a loan from a bank. As it is not foreseeable in the case of temporary employment contracts whether they will be extended, the borrower cannot provide evidence of sufficient income for the entire term.
If you need a loan with a fixed-term employment contract, you should choose the term so that the loan is completely repaid at the end of the term. In the event that the employment contract is converted into a permanent employment contract within the term, the borrower can apply to the bank for an extension of the term. With an appropriate income, most banks are readily willing to extend the term.
Be careful with an online immediate acceptance
In most cases, those who apply for their loan online will receive an immediate approval from the bank if the loan can be approved. Since not all banks ask in the order form whether the employment contract is temporary, it can happen that a loan with a temporary employment contract is also promised.
However, this commitment is only preliminary and has no legally binding character. The borrower must send his documents to the bank again together with the loan agreement. For example, the employment contract must be submitted to some banks.
When all the documents have been received by the bank, the bank carries out a final credit check. If the bank then finds that the borrower’s employment contract is limited, it can still reject the loan application. Therefore, you should not rely too much on the instant approval for a loan with a temporary employment contract.
Increase your own credit rating
Under certain conditions, banks may be willing to grant a temporary employment loan. This is particularly the case if the borrower can provide appropriate security. For example, the loan can be secured by a guarantor or by valuables. A capital-building life insurance can also be deposited as security.
It is important for a guarantor that the guarantor must have an excellent credit rating. In addition to an open-ended employment contract, it must not have negative entries in its Credit Bureau.