The structures of employment in the country have changed significantly in recent decades. In the past, it was common to work in a company from apprenticeship to retirement, but nowadays, shorter forms of employment relationships up to pure project employment contracts are common.
The safety of one’s own job is no longer as high as it was a few years ago. Despite this development, the need for loans to finance larger purchases remains high. It doesn’t matter whether the financing is for a new car, the dream kitchen or other purchases. When lending their capital, lenders primarily look at the applicant’s income security.
Temporary employment contracts as a risk for the lender
The lender sees the main uncertainty factor precisely in the time limit of the employment relationship. After all, at the time of applying for a loan, nobody knows whether the employment relationship will expire at the end of the fixed-term contract or whether the current income will continue to exist. For this reason, it is often difficult for employees to get a loan despite an annual contract. Small loans are an exception here and can be repaid within the fixed-term contract.
Since the applicant can prove an income over the entire period of the loan, banks and other lenders also agree to a loan in spite of the annual contract. As an alternative to loans granted by the house bank or a direct bank from the Internet, the borrower can also look for a private person as a lender. Here the terms of the loan agreement are often more freely negotiable.
In addition to interest rates that are sometimes cheaper than bank loans, this form of loan is often characterized by a particularly flexible repayment of the loan amount. Special portals on the Internet have set themselves the goal of connecting private lenders with loan seekers.
Improve credit opportunities with additional collateral
However, many loan seekers have more confidence in a loan that is processed and managed by the bank. There are various ways to improve your creditworthiness in order to get an appropriate loan despite your annual contract, even with your special income situation. In lending, everything depends on the lender’s certainty that he will get all of his capital back.
To increase this security, property, such as real estate or life insurance, can be used, if available. Alternatively, guarantors can guarantee the full repayment of the loan by the borrower. If the borrower does not meet his payment obligations in full, the guarantors are liable for their failures. If the guarantors have a permanent income or other security is available, lenders also agree to a loan despite the annual contract.