The form of employment is very important in the process of debt repayment capacity assessment. It determines not only the amount, but also the very possibility of granting a loan by the bank. It is worth remembering that employment based on civil law contracts is not tantamount to rejecting the application for a cash loan.
In recent years, we have been observing attempts to civilize the civil law market. The beginning of the last year saw the waiting for orders to be expected. It is a matter of time to apply this mechanism to still-popular contracts for a specific work. The sign of creeping humanization of the regulations is also valid from 1 January 2017, the minimum hourly rate of 13 PLN gross for the contract of mandate. Observing this trend, the question arises – do banks in the process of assessing creditworthiness stigmatize people employed in “junk” contracts?
Etat in two variants
It is no secret that bankers, when assessing the customer’s ability to repay potential debts, look with greed at people earning income through an employment contract for an indefinite period. However, this appetite has a strong justification. First of all, workers employed on perpetual contracts are usually treated by employers as particularly valuable units. And this reduces the risk of sudden loss of job and loss of income, which is undesirable for banks. Secondly, people employed on the basis of an indefinite contract of employment are characterized by very good payment discipline.
Less less favorable but still greedy are the borrowers employed on a temporary contract. The limited validity period creates a greater risk of termination of employment, which in turn may affect the timely servicing of cash loans. In such cases, financing is often provided for the period, which is determined by the expiry date of the current employment contract. A way out of this situation may be to present a promise to the bank, in which the employer undertakes to re-employ the borrower after the current contract expires.
Civil law agreements
It is not by accident that at the very end of the list there are civil law contracts, which are not accompanied by so much enthusiasm from the bankers. However, one who thinks that clients who work under a contract or contract for a work can only kiss a gilded door handle is mistaken. The mere fact of earning money on the basis of a “junk” contract does not put the borrower in a lost position. What’s more, it may turn out that a person employed under a civil law contract is characterized by a higher creditworthiness than a full-time employee.
Period of employment
The first confirmation of employment stability, from the point of view of the bank, is the period in which the potential borrower earns income from work. In the case of an indefinite period, the period is from 1 to 6 months. However, the 3-month variant is most often used. Some banks apply additional restrictions, eg PKO BP is normally satisfied with full-quarter employment, however, in the case of incomes achieved abroad, this period is extended to 12 months. On the other hand, the institutions increase the chances of obtaining financing by allowing the aggregation of periods of employment in various workplaces.
Multidimensional assessment of the borrower
When it is known that employment based on a civil law contract is not an obstacle, it is worth realizing what it can be. In assessing the ability to service debt, the bank scans a number of parameters not necessarily related only to the possibility of generating income. Of course, the first violin plays the salary in the verification process, but the bank also assesses such aspects as the period of employment, age, education, occupation, credit history or current liabilities. Not without significance is also the property owned by the applicant, which may serve as an additional security for the loan.
Detailed analysis of all parameters may yield unexpected results. With the rest, you just have to answer a simple question – who did we borrow our savings for? A person with high incomes, full-time, having numerous obligations and even more problems with their timely service or perhaps a person working contractually, achieving a regular, although not the highest, income that has been exemplary for three years and has no current liabilities ? Although this is a big simplification, we would say that the choice would fall on the applicant No. 2. Banks approach the issue similarly.
Pensioners, pensioners, specialists
Since we have moved the relationship between the form of employment and the possibility of taking out a cash loan, it is impossible not to mention other very common sources of income. We mean mainly pensions and pensions. The proceeds from this title are characterized by cyclicality, and their value is not subject to significant fluctuations. As a result, banks assessing creditworthiness can quickly and accurately assess the future cash flows of a potential applicant. Revenue verification is very simple and takes place on the basis of a retirement or personal account statement.
Special representatives can count on representatives of the so-called free professions. Banks belong to this group, among others doctors, legal counsels, attorneys, notaries or pharmacists. Specialists, whose competitive advantage is reputation and good repute, are usually very timely and reliable borrowers. Therefore, banks assessing the ability to service debt with a grain of salt look at the form of employment of the applicant. In turn, the income of specialists is usually verified on the basis of a submitted statement. This confirms only the confidence that the representatives of free professions enjoy among bankers.
Cash loan regardless of the form of employment
Although the bankers treat the income of full-blooded full-time employees with particular affection, those employed under civil law contracts do not stand a chance. Credit rating is a multi-faceted process, focused on the analysis of various circumstances and events. It affects both the financial and economic condition and the life situation of the potential borrower. Often an obstacle on the way to credit is an unacceptable credit history or high level of current indebtedness. In such cases, the borrower’s form of employment goes down to a more distant plan.