The point at which current expenses exceed income is quickly reached, especially with larger purchases. In principle, there is nothing to be said against a loan in order to finance the financial burden of expenditure through a monthly installment. Above all, expensive purchases such as cars would often not be possible otherwise. However, even smaller purchases such as household and leisure electrical equipment or more expensive repairs often require a loan. Now it depends on the income situation of the loan seeker.
How to get a loan despite a temporary contract
When granting credit, lenders primarily consider the applicant’s monthly income and security. Ideally, the applicant has a high income and a permanent job. But the reality is often different. Many employment relationships are currently concluded for a limited period of up to two years. Especially when looking for a loan, this often presents the applicant with major challenges.
If the applicant needs a loan that they can repay within the time limit of their employment contract, the search for a loan is usually not a problem even with a temporary contract. However, due to the relatively short term, it should be ensured that the monthly rate is still within the framework the borrower’s financial options remains. If the installment cannot be paid in full on time, one or more times, it can be expensive for the borrower. In addition to dunning costs and interest on arrears, it may be the case that the loan is due in full immediately despite the temporary contract.
It will be more difficult to get a loan with a term that exceeds the duration of the employment relationship. Here, lenders only give their approval for a loan despite a temporary contract if the applicant can provide a surety or other property as security. Life insurance or real assets of the appropriate amount serve as possible collateral.
Fixed-term contract or temporary employment agency – an important difference
The concept of credit in spite of a temporary contract can be confusing at first glance. After all, there are two employment relationships that could be common here. While employees with a fixed-term contract have to worry more about the duration of a loan or alternative collateral, temporary agency workers often have permanent contracts. Even if they often change their jobs as contract workers, they have a fixed and permanent income and thus have the basic requirements for the granting of loans.