Applicants for loans are well aware of the fact that the employment contract is one of the basic sources of income taken into account by banks. The form of employment of the person who applies for a loan is also very important.
It has been known for a long time that customers with an employment contract of indefinite duration are in the best position when they apply for a payday loan. But what if we only have a fixed-term contract?
Customer’s ability to pay back the debt
Each bank, when receiving a loan application from a client, must examine the financial situation of the applicant very carefully. This serves primarily to correctly assess the person’s ability to pay back the loan. It is therefore not surprising that clients with stable employment present themselves best during this process.
However, persons employed under a fixed-term contract are in a slightly worse situation. Such a temporary agreement may be a signal to the bank that the client does not have a reliable source of income, which has a significant impact on the assessment of his ability to repay the liability towards the bank on time. The temporary contract does not remove us as potential borrowers, however our credit rating may be lower.
Conditions for granting a payday loan under a fixed-term contract
People who are employed on a fixed-term contract can still apply for a cash loan, but usually the requirements are slightly higher. The exact conditions for granting such a loan are of course set individually by each bank, but there are certain rules that are common.
First of all, the period worked by the client on the contract currently binding counts. In most cases, financial institutions require it to be between a minimum of three and six months.
The fact that our fixed-term contract is another one from the same employer may work in our favor. The bank will pay attention to this when assessing our creditworthiness. It is important how long we have concluded the contract with the given company. As you can guess, the bank will not grant us a loan for a period exceeding the duration of such a fixed-term contract. Therefore, if the customer receives a positive decision regarding the loan, the date of repayment of his last installment will fall on the last or penultimate month of the contract. If we want a longer repayment period, we can provide the bank with a written promise from the employer that the current contract may be extended.
Other bank requirements
As with any other loan, people applying for a cash loan with a fixed-term contract must meet certain conditions. First of all, it is about a sufficiently high income, which will be a guarantee for the bank that we are able to pay installments of a certain amount each month. The borrower’s age or education is also usually taken into account.
One of the basic issues checked for all types of loans is the history of previous debts of the applicant. People who have had problems repaying any obligations on time in the past may have a lot of trouble getting a loan from a bank. In such a case, the financial institution may consider that the client being in the BIK register is not a credible borrower. Therefore, when considering taking a loan, you should always measure your intentions by carefully analyzing your financial capabilities.
Cash loan in a non-bank company
Often, despite our efforts, the bank may refuse to grant a cash loan. However, this does not exhaust our possibilities of obtaining additional funds. After all, banks are not the only financial institutions in which we can apply for a loan. Non-bank companies also offer us their services in this area.
The comparison tool will help us in choosing the best credit or loan, with the help of which we will check the offers of many institutions. A loan calculator may also be a useful tool. We also always check carefully the content of all contracts and the fees associated with the loan granted to us. This is about interest rates as well as commissions or fees for starting a loan. Thanks to this, we will be able to calculate how much we will actually have to give to such a company and whether we can afford it.