Most applicants have income from a source other than an indefinite employment contract. Fortunately, banks grant loans not only to full-time employees. Those who work on civil law contracts also have a chance for credit. However, banks will check their creditworthiness much more accurately
Will I get a loan without an employment contract?
Contrary to appearances, people running their own business or working under civil law contracts can also get a cash loan. Opinions that such clients have no chance for financial support are greatly exaggerated. The employment contract (especially for an indefinite period) is best rated by the bank. However, this does not mean that another form of employment will automatically translate into a negative credit decision. In addition to employment stability, creditworthiness and credibility are also important. Receiving a constant and regular income (regardless of its source) is a signal for the bank that we can afford to pay the monthly installment.
What will the bank check?
Taking a loan without an employment contract is possible. However, we will be forced to complete some additional formalities for the loan to be granted to us. First, after presenting documents confirming our employment, this fact will be checked by the bank. Secondly, we will have to prove that we actually receive remuneration. Its amount (the one that we entered in the loan application) must also agree. Depending on the specific bank, you will need to either provide income statements or provide bills and account statements. Typically, the bank asks for bills from the last six (for mandate contracts) or twelve (this applies to specific work contracts) months.
Importantly, the bank will also check us in BIK and other debtors’ registers. If we are in any of them we must take into account the issuing of a negative decision. When we present personal account statements, the bank will also consider our lifestyle. Here, the ratio of income to expenses will be important and whether we can afford to save a certain amount every month. Assuming that we can afford to save money, in the bank’s opinion we will also be able to pay back the loan.
Contract for specific work and mandate contract
Banks care not only about the amount of our income, but above all about their regularity. Financial institutions consider earnings from a source other than the employment contract, but they set slightly different conditions for such borrowers. The most important condition is to document your income. It is best if we work for more than 12 months on a commission or work contract. Demonstration of continuity of received orders will speak in our favor. The shorter the employment breaks, the better for us as future borrowers. Small breaks are admitted, but in the eyes of the bank our financial standing must be stable.If we appear as reliable customers who can afford to pay the installment, the bank is much more willing to grant us a loan (even if we do not have an employment contract).
Another difference is how you calculate your income. When making an employment contract, the bank takes into account all of our remuneration. If we do not have such a contract, the financial institution will take into account from 50% to 80% of revenues. Thus, the amount analyzed by the bank will be much lower than the amount that actually affects our account. Therefore, if we do not have an employment contract, it is worth analyzing the offers of the banks and the requirements they set in detail. These are different for different banks. Discrepancies in the assessment of our creditworthiness can be as high as several dozen percent.
Contract of employment on specified time
People with fixed-term employment contracts are in a slightly better situation than people employed under civil law contracts. Here banks set very similar requirements for potential borrowers. Their temporary contract could not be recently signed, nor can it expire immediately after submitting the loan application. Usually, proof of employment must be presented to the bank, which will confirm the stability of our material situation. For a given employer, we should be employed for at least half a year and have a signed contract for at least the next six months (sometimes it is 12 months). Sometimes a bank may ask for a promise of employment, ie a document in which the employer declares that after the contract has expired, he will continue to employ us.
Self-employed people, ie those who run their own businesses, also have a chance for a loan. They are treated in the same way as any other entrepreneur, and their creditworthiness is calculated on this basis.
The first criterion taken by the bank is how long our company exists. The longer we run a business, the better our chances of getting a loan. The minimum period is 12 months. However, there are banks that allow you to apply for a loan only 2 years after starting the company. This is because the majority of sole proprietorships collapse within the first two years of being created. Banks are therefore trying to protect against this situation as best as possible. The exception to these requirements is the situation in which our activity is a continuation of the previous one. Then the bank may (although it does not have to) shorten the time after which we have the right to apply for a loan.
As with civil law contracts, the bank will not take into account all our income. In the case of self-employment, the amount of taxable income is analyzed (including tax deductible costs). If, despite irregular income, the bank positively assesses our creditworthiness, then even as self-employed people we can get a loan.
Will I get a loan without an employment contract? Summary
Cash loan after meeting certain requirements can be granted to us even when we do not have an employment contract. To increase the chances of issuing a positive decision, let us pay our previous liabilities and carefully document the amount of income received. Let’s also make sure that our account has savings that allow you to pay the installment. Let’s present ourselves as credible and reliable clients, and we will be able to be almost sure of positive consideration of the application.