Temporary employment is always a risk for employees. They do not know whether the contract will be extended or whether they will have to look for a new job after the contract. Even during this time, it is normal for purchases to be made or for bills to be paid.
Consumers do not want to do without a loan, either, and will not be very successful when applying. Banks make money with loans and do not want customers who offer little security.
What security is missing?
Workers who have a fixed-term contract have a major problem with lending. Income is only guaranteed for a certain period of time and there can be no guarantee that the employment relationship will be extended. It can happen that the employee becomes unemployed and only receives unemployment benefits.
Since a loan has to be repaid monthly, there is often no money left to pay the installments. The money from the office is a social benefit and cannot be attached so that it does not count towards income. As a result, banks do not take any risks unless the employee already has a new contract in their pocket saying that the employment relationship will be extended.
Often, however, they only learn from the employer shortly beforehand whether or not they want to keep the employee employed.
Can other collateral help?
Banks always ask for collateral to secure the loan and guarantee that the installments are paid. As a loan is lacking this guarantee despite a fixed-term employment contract, an attempt can be made to offer a guarantee from the bank. If someone is found who has a fixed-term contract of employment, a attachable income and a clean Credit bureau, it cannot be ruled out that banks will then grant a loan.
However, this will usually not be very high, but a small loan can also help the applicant in the short term. However, banks do not always respond to this, so rejection can also be expected, even though a guarantee would be available.
The best thing would be for the employee to wait until he knows exactly whether his employment contract will be extended, because with this certificate he can then apply for a loan in spite of a fixed-term employment contract without fear of a rejection.
It is not easy for workers to get a loan despite a fixed-term contract. While collateral could help, it is not accepted by all banks. If you do not have to pay any important bills, you should rather wait until the employment relationship is extended and then apply for a loan.