A loan without a permanent employment contract is entirely possible, but the fact of a temporary employment contract does not exactly contribute to an increase in creditworthiness. Quite the contrary, because the bank has little planning security for borrowers who are in temporary employment and must therefore consistently assume that the employee could lose his job during the term of the loan.
Protection against dismissal for temporary workers is not nearly as strong in Germany as the protection of permanent workers, which is why a job loss can occur. This would result in a difficult situation for both the bank and the borrower, because if the loan is still paid off at this point, it will hardly be possible to repay the installments as unemployed on an ongoing basis.
As a result, the borrower had sufficient funds to pay off at the time of the loan application, but the loss of a job has created a new situation that was previously difficult to grasp. Temporary contracts can of course expire at any time while the term of the loan still exists.
According to this, borrowers with a fixed-term employment relationship have two difficulties, because on the one hand the term must not exceed the term of the contract and on the other hand banks automatically downgrade their creditworthiness because the borrower can be terminated more easily.
Difficult situation is by no means impossible
Taking out a loan without permanent employment is therefore a stumbling block, but that does not mean that borrowers should give up in advance. A loan without permanent employment is entirely possible if the term of the loan is chosen to be as short as possible. In this way, the loan remains within a manageable timeframe for the bank, and there is also no need to constantly calculate the risk that the contract will expire during the term of the loan and could not be extended.
The use of a guarantor can also have a positive effect on the judgment on the loan application if the guarantor himself has a regular income of a not insignificant amount and a permanent position. Then the bank receives additional security, which results in a much more positive evaluation of the creditworthiness for the borrower.
As a result, the credit line also increases, which is why higher-value loans are made possible. It may also be advisable to provide some attachable collateral with the bank. A car that has already been paid off can increase creditworthiness and, in the event of a delay in payment, gives the bank a starting point with which the outstanding debt of the borrower can still be paid.
Ultimately, the individual situation also decides when it comes to a loan without permanent employment.