In contrast to the past, the world of work has changed dramatically. There are many workers who work on a temporary contract. These workers cannot plan into the future and do not get a loan with a temporary contract. Not only young people are affected by this, even academics or scientists work on a temporary contract.
This often lasts for several years, namely if the time limit is always extended. No perspective regarding future planning can burden many workers. Banks or other donors generally refuse a loan with a temporary contract. Nevertheless, there are ways to raise funds.
The loan with a time contract – the prospects
The trend of today shows temporary employment contracts and temporary contracts in almost all professional sectors. Even highly qualified people often only receive a temporary employment contract. Temporary contracts have been designed to create a flexible labor market. If you take a closer look at the condition of a temporary contract, you can also see positive features.
We are thinking of a pregnancy replacement that is concluded with a temporary contract or also in the case of long-term illnesses of employees, an employee with a temporary contract provides the perfect solution. However, there is also a lot of abuse. In July 2012 the BGH already criticized the so-called chain time contracts in the public service.
Some purchases, repairs or renovations can usually not be paid from the financial monthly budget. The normal citizen then goes to the bank and applies for a loan. If he can meet the conditions of the bank, the loan will also be approved. In addition to a sufficiently high income, the bank also requires permanent, permanent employment.
If the employee is unable to present this because he has a temporary contract, he has the option of taking a second borrower or a guarantor into the loan with a temporary contract. The other variant could expire with the time limit. The loan then has a term as long as the time limit lasts. Especially with a small loan, banks are generous with this constellation.
Neither the bank nor the employee knows what will come after the end of the time limit. If the employee becomes unemployed or his contract is extended. The employee receives unemployment benefit if he becomes unemployed, but this is generally lower than his income. The allowance will be just 60% of the last net income.
For banks, however, income plays an important role. This must be sufficiently high and show a garnishable share. There is also an open-ended employment contract that secures the income. Smaller loan amounts that are paid at the end of the time limit are not a problem. Large financing, on the other hand, creates problems.
As many workers know, there are long-term and short-term contracts. A manager who works on a project is hired on a temporary contract that lasts until the project is completed. That can be several years. This professional group in particular receives very good income so that high installments can also be paid.
If the project period is set to run for several years, there will also be a loan with a temporary contract, as income is secured in the long term. That can be quite large loan amounts.
However, a different picture emerges if the temporary contract is limited to one year or even several months and the employee “only” has a normal income. Neither the bank nor the employee knows what will come after the end of the time limit. If the employee becomes unemployed or is taken on. There is also the possibility, provided that the employee knows exactly that he will be taken on, by the company to submit a notification.
Likewise, there is a different situation for school leavers. They work for one year on a temporary contract and then start studying. If the student can then use German state funding or other grants, a student loan could be applied for. However, this leads to a completely different credit situation.
In summary, there is the possibility to get a loan with a time contract if the loan is paid off within the time limit. In most cases, however, only a small loan is provided. Larger loan amounts are then only approved with collateral.
The credit protection
If an employee needs a higher loan amount, the loan must be secured as mentioned above. He can then, for example, include a second borrower in the contract. But this is also checked for its solvency, in addition, the Credit Bureau must be impeccable and have a permanent position.
If the second borrower is a pensioner, the pension notification is considered a secure income. However, it is important to pay attention to the age of the pensioner. Parents or grandparents could be named as the second borrower.
A surety is also used to secure credit. The guarantor must meet the same conditions as a second borrower. With his surety he is liable with his assets in the event of a loan default on the part of the borrower and must continue to pay the installments. Most banks require a joint and several guarantee, which equates the guarantor with the debtor. This means that if the borrower no longer pays for the loan with a fixed-term contract, the guarantor must do so; the bank does not even have to carry out a complex reminder procedure.
Many ruins have already resulted from a guarantee. This happens when the guarantor is unable to pay the loan installments. In this regard, the bank will examine the guarantor comprehensively and examine its economic situation.
Temporary contracts affect all professional groups today. Doctors or respected professions are also affected. These are, so to speak, large earners who could pay a loan with a fixed-term contract at high rates. The bank could then also provide a higher loan amount for these people.
Small loans always go to banks. If you are looking for real estate financing, you should wait until the job is permanent. If the bank approves a small loan that goes beyond the time limit, the employee should choose the installments with a view to unemployment in such a way that they are also payable in the event of unemployment.