Personal loans: how important is the type of employment contract

No one will probably be surprised to discover that receiving a personal loan or a mortgage is much easier for those who have a permanent job than their peers with a fixed-term contract. Yet it is interesting to analyze all the implications of the story and discover that the offer for workers with the so-called fixed place is much wider, but at the same time the costs do not differ at all for the two categories. Few differences also affect the rates applied. 

Because it counts the type of contract

Because it counts the type of contract

It falls within the parameters most taken into consideration during the preliminary investigation phase by the Credit Analysts of all banking institutions and all financial companies: it is the pay slip. In reality, it is the income situation that, in the case of an employee, in the absence of assets, is reduced to the cud and payroll, in fact, of interest to the providers.

What are the elements checked in the pay slip? Surely the net received in the envelope by the worker, who tells the bank what is really available to the applicant, then there are any further commitments in the envelope that can portend a liquidity tension or in any case can provide further information: transfers in progress or expiring, foreclosures, family allowances. The credit analysts then verify the type of employer, the hiring date and, above all, the type of contract: indefinite or term.

Based on the parameters listed above, and above all on the last one, a practice can immediately be viewed positively or negatively.

As it is obvious that it is, a worker with an income deriving from a forward contract cannot guarantee objectively constant incoming flows, which consequently exposes the bank to a strong risk given that the possibility arises that the applicant becomes insolvent.

Yet fixed- term employment contracts are steadily increasing and are replacing the more reassuring permanent contracts. In 2013, it is good to note, the percentage of those who have a fixed-term contract has risen to 13.2% compared to the meager 5.2% recorded in 1985. But the data must be read, to frame the phenomenon well, with referring to young people entering the labor market, and therefore we need to look at new hires. Well in 2013 out of the total number of young people aged between 15 and 24, 52.2% have a temporary contract, in the age group between 25 and 34 the share of temporary workers is 21, 7%.

Differences on the number of offers

Differences on the number of offers

In the survey conducted we wanted to study how and in what quantities the offers offered to a permanent worker with respect to a temporary worker vary. The same research was carried out but with reference to the Taeg. Obviously all this on equal terms.

In the survey carried out, it was decided to consider a 30-year-old man living in Rome. The requests examined were two: a twenty-year mortgage for first-time purchase of 60% of the value of the property and a 24-month loan for the purchase of a car.

As regards the case of the loan, the data of the test subject were inserted in the comparator and in the case of the loan on the comparator prestitionline. The fake requests were made on July 14, 2014 and repeated on other days to verify the reliability of the data.

Reading the data collected, the conclusion is that there are significant differences in the number of offers received by the two types of workers. The permanent worker can count on a more varied choice.

Differences on the taeg

Differences on the taeg

From the investigations carried out through the simulations, the Taeg would not seem to be influenced by the type of contract of the applicant. In determining pricing, the higher risk associated with the forward contract does not correspond to a discriminating factor in the order of Taeg. 

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