Temporary work has become increasingly popular on the UK labour market over the past two to three decades. This approach is helpful for many companies, for example, if they only need support for permanent employees in acute phases.
Companies or self-employed persons do not always have sufficient capital available to be able to continue to afford additional employees in permanent employment after the end of phases with particularly good order books. We will not discuss the pros and cons of the temporary and contract work model at this point. However, the dilemma of many borrowers who need a loan in temporary employment is already being discussed.
Temporary employment does not have to be a “no-go” for financing
In fact, starting a temporary job is sometimes linked to the hope that the new job can also improve the chances of success in case of a more or less urgent loan application. In individual cases this is certainly true. In many cases, however, the search is as tedious as it is likely to fail. However, it is always worth a try if the financial situation makes it absolutely necessary to take out a loan.
Already the realization that some bank and some switching portal consciously with the term “credit with time work contract” speaks for leaving nothing undone. The fact that the number of advertising advertisements in this or a similar wording is low means positively regarded: There are loans for temporary workers. You just have to find the right offer.
As with loans for people with rather low incomes (many temporary workers are themselves low earners), the probability of a commitment is influenced by the amount of the desired sum under all circumstances.
Income and term are the most important criteria for banks
In other words: If a bank offers a financing of 20,000 GBP or more for a maximum term of two or three years with a demonstrably low income and a limited employment relationship, you should first read the conditions of the loan interest rate, including the small print, sceptically and calmly. Two facts come into play here that every applicant should take to heart.
On the one hand, time pressure is never a good advisor when looking for a loan. Especially not if you need a loan for temporary work. On the other hand, banks have no money to give away. In view of the unavoidable risk of default in the case of large amounts of credit and professional activity over a – at least for the time being – limited period of time, borrowers should assume an above-average annual effective interest rate. As always, exceptions confirm the rule here. There are of course also temporary workers with higher incomes. Of course, they can also borrow higher sums in the short term.
Exact comparison is worthwhile especially for loans despite temporary work
This is not to say that loans for temporary workers must be dramatically expensive without any ifs and buts. However, it undoubtedly means that professionals in temporary employment such as the unemployed and low-income earners may pay more than applicants with an optimum Agency score and regular high income, at least in the case of creditworthiness-based financing.
The fact that credit institutions generally react more openly to applications from people in temporary employment certainly has a purely statistical reason. For years the number of temporary and contract workers in UK has been rising. Even if the good labour market situation, which has lasted for years, has in the meantime resulted in more permanent contracts. A general rejection of temporary workers would mean that the banking industry would miss out on sales.
Temporary employment and poor credit rating stand in the way of commitment
Incidentally, a similarly favourable development was also seen from the point of view of many pensioners, who had to reckon with negative credit decisions for a long time from the age of 65. Today, far more banks grant loans to senior citizens than they did about a decade ago. As a result, temporary employees enjoy better conditions if there is no way around financing. A lack of “job security” need not therefore be an unavoidable obstacle.
The unfortunate interplay between temporary employment and poor creditworthiness due to a number of negative entries in the Agency register, however, is something of a killer argument in the search for credit. Then it is almost impossible to secure a loan despite temporary employment.
Agency-free credits: An opportunity not without risks
Apart from the exception of “creation-free loans”, which are also known as Swiss loans, as they were often offered by companies from the Alpine republic in the past. For their part, these loans are often very expensive, unless they are very short term loans, ranging from weeks to a few months. In the meantime, an entire financing industry has emerged here, which helps consumers with short-term bridging loans.
Do you need more than sums of up to 1,500 GBP and do you need more time to repay the loan because of income? Then you are usually dependent on classic loans for temporary workers from banks. If you are worried (not always without reason) about your own creditworthiness due to multiple non-binding inquiries, you can call up offers from several partner banks of the portals Agency-neutrally on various intermediary platforms.
Agency-neutral means in context that the non-binding inquiries do not result in a report to the Agency. Many banks send reports to the Agency even in the case of enquiries without a contract. The result is problems in the future due to a worse credit rating. Many consumers are not aware of this fact. “Neutral” inquiries do not have such effects, but the concluded contract does.
Private capital injection as an alternative for temporary employment?
The financing method with the least bureaucratic effort is also and especially in the case of a loan despite temporary employment the private one. However, not everyone with a need for credit can or wants to borrow money from relatives, friends and acquaintances. Nevertheless, there is a second option – namely in the form of portals that arrange loans from private to private.
There, interested parties present a credit request and in many places offer an interest rate that they are willing to pay. A higher loan interest rate and a good presentation (as well as the positive result of the likewise usual Agency inquiry) increase the prospect of being granted such a loan for temporary employment. Of course, a fixed framework for repayment also plays a central role in these two options as a loan for temporary workers. Exception: Gifting in a family/private environment.
Even here and in the case of a private loan from relatives, experts recommend for tax reasons drawing up a contract with all the important details from the amount to the interest rate to the repayment period.
In general, credit specialists come to the conclusion in tests and comparisons that the success rates for the “risk group” of temporary workers are generally better with online loans than with the traditional branch business. In addition, the rule applies: the lower the desired sum, the more likely banks are to say yes to the application.
Second borrowers and guarantors are welcome banks
Finally, there is another effective instrument available if the desired sum, low income, problems with creditworthiness and, in particular, the request for a loan despite temporary work lead to rejections. The keyword: collateral. Collateral is not only home ownership or a paid-up car. Also the conclusion of a contract with a second person can serve to optimise chances.
Of course only if the second applicant can present an unlimited employment contract, earns enough in view of the loan amount and is not also burdened by a bad credit rating. Joint applications and thus significantly more income often lead to the goal after all. The same applies to temporary employment loans where a creditworthy guarantor appears. If someone is prepared to step into the breach in the event of a loan default, banks are also more generous than if temporary workers apply for a loan on their own.
Unfortunately, benefits from the office are no help if temporary workers are entitled to top-up benefits from the “ARGE” as low earners. Such funds are usually not considered as income.
Maturities beyond contract duration problematic for banks
Last but not least, let me remind you once again: If you need small amounts of money and want to pay off quickly, you do not have to fear numerous cancellations. Ideally, terms are agreed within the period of employment specified in the fixed-term employment contract. Then applicants, like other borrowers, can hope for a commitment. Quick repayments, on the other hand, not only pay off for the loan despite temporary employment, but also reduce the interest costs for the loan as a whole.