The prerequisite for obtaining a car loan is that the borrower can meet his obligations under the loan agreement as agreed. However, how do banks handle it if the loan applicant can not provide an indefinite employment contract?
Fixed-term employment contracts are common in many industries today, especially since no time limit has to be established during the first two years of employment. Many employers extend the employment contract several times during this period. Well-founded temporary contracts or temporary contracts for sick or pregnant workers are also widespread.
Different reasons for not having a permanent employment contract
The fact that the vehicle buyer must apply for a car loan without an indefinite employment contract can have different causes. The car buyer may be self-employed or self-employed, so naturally he has no employment contract. However, in most cases a loan without an indefinite employment contract describes the situation that the borrower wants to take out a loan during a fixed-term employment relationship. In many cases, car loans can be applied for on a permanent basis, as both auto banks and commercial banks are often satisfied with submitting a pay slip.
From this a temporary employment relationship is not apparent, so that the time limit is not necessarily striking. If the vehicle buyer can afford a third of the purchase price as a special payment, auto banks usually even waive the submission of the salary, so that the borrowing is easily possible despite a fixed-term contract. Even commercial banks do not always insist that they provide the lessee with the salary certificate as well as the employment contract.
The auto bank lends the car loan to an above-average interest rate, while the buyer can negotiate a large discount for the car when borrowing through a commercial bank. Extremely cheap loans of the Autobank are mainly limited to a few makes, which sell badly and thus later than used cars achieve only a small revenue.
The risk of borrowing despite fixed-term employment
Anyone who takes out a car loan without a fixed-term contract takes a risk. The bank usually signs a statement of assignment for vehicle financing and can utilize the car in the event of non-operation of the loan. The risk of improper loan repayment is high if the borrower loses his job. Since expiring fixed-term contracts can be terminated without notice at the end of the contract, the loss of employment is more likely than average, as the non-renewal of expiring contracts is much easier for the employer than scheduling redundancy.
Those who take out a car loan without a permanent contract pay attention to low loan rates and to the fact that the bank agrees to change the repayment agreement. If the lender does not specifically ask for a possible time limit on the employment relationship, the customer does not have to specify it.