Verifying the form of employment is one of the elements of assessing the customer’s creditworthiness. The bank must check whether the income from our work is stable and regular enough to be able to repay our loan. Therefore, there are employment forms preferred by the bank and less liked. And the commission contract? Which group does it belong to?
The best employment contract
The most popular and also the most popular form of employment by the bank will be an employment contract. This can occur in a forward or indefinite option. Of course, it’s better if the employer employs less indefinitely. Then, in the event of a possible dismissal, I will always have a notice period, which increases along with the duration of the contract up to 3 months. 3 months is the period in which I should statistically find a new job, which gives the bank relative security of income continuity. The forward contract no longer gives such a certain guarantee, but still provides the borrower with considerable stability. Of course, the contract must also last for several months before the potential borrower applies for a loan at the bank. The minimum accepted period is 3 months.
Business activity is less certainty
There are almost 2 million business activities registered in Poland. This shows that work in this form is popular. You can run your business in a variety of forms – at the very end, what counts for a bank is whether my average income over the last 12 months is enough to cover my costs and of course pay the installment of a future loan. The bank will ask for financial documents, check my income, expenses and income. In the process of assessing creditworthiness, I will also be asked to document that I am not in arrears with contributions to the Tax Office and Social Security Institution. He will also restrictly approach the period of business – at banks it is a minimum of 12-24 months.
Contract / work contract
The employer is not always willing to hire me based on an employment contract. This will often be dictated by the lack of full-time employment for a person. On the other hand, an employee may appreciate greater flexibility, operate on the market as so-called freelancer, carry out orders for more than one contractor, but in all this do not want to start a business. Acting in this form, I can settle the contract. However, as a potential lender, I must be aware that a mandate contract may limit my ability to incur liabilities. Let’s look for the answer to the question: I have a commission contract. Will I get a loan?
The commission contract does not disqualify
The mandate contract does not close the way to financing, assuming that I prove to the bank the continuity of the income generated from it. A good borrower for a bank is one that regularly generates income monthly to cover costs. It is better, then, if I earn PLN 5,000 in income every month by earning PLN 60,000. It is worse if the mentioned 60,000 PLN came from one order that I completed in a month.
First of all – regularity
The income regularity limit in the job order will be between the employment contract and the business. In most banks I will have to show continuing employment over the past 6 months. It will not matter to the bank whether I worked for one or several principals at the time. I could also perform several commission contracts simultaneously. However, it is important that the break in their implementation is not more than 5 days.
Perspective is important
The bank, of course, checks what was – no less important is what will happen. The loan applicant will have to show that he has something to do for at least one month ahead, i.e. he has a contract or contracts that will secure him employment. Of course, the longer this period, the better for the bank, the more certainty it will have about continuity of employment.
In every credit process, the bank will want to confirm that what we are saying about the level of generated income is true. In the case of employment under an employment contract, the Institution will ask for a certificate from the workplace. For business activities, the company’s financial documents will determine the income generated. And how do you authenticate yourself in the eyes of a bank with a mandate contract? There are several possibilities. I can bring a certificate from the client. If this was one in the last months, this form is justified. If few, already fewer – I would have to go to everyone and ask for a certificate. In such situations, it will be faster for the bank to show a copy of the concluded contracts and an account statement confirming the receipts. This should be enough for the bank to authenticate us as borrowers.
The mandate contract does not disqualify you from taking a loan from the bank. If I prove the continuity of income, I will be one step away from receiving a positive decision.
Will I get worse credit terms if I have a commission contract?
The key in defining the parameters of the offer for the Customer will be the risk borne by the Institution on the given transaction. It is known that a customer with an employment contract will be more attractive. But also not always – is the borrower who earns PLN 5,000 on the employment contract better, or will the one who reaches the income of PLN 10,000 on the job contract be better? Therefore, you can’t generalize – at the very end the bank’s scoring card will show you exactly how much the customer should pay for the money. The client with the order agreement can therefore receive more expensive money, but you can not generalize that it will always be so. The difference can also be a period – for example, the standard offer of bank in cash loans is even for 144 months. If I work under a mandate contract, I can count on no more than 66 months.
Joining of revenues
Nobody will stop me from working more – for the bank, every extra income works as an asset. So if, for example, I work under an employment contract and additionally I have a mandate contract, the bank will add this additional income to my creditworthiness. As a result, I can count on a larger loan or better rating, and thus better conditions.