Applying for a loan involves a number of clearly defined requirements, the fulfillment of which is treated in an absolute way. Such records include permanent employment, which has a key impact on the parameters of the obligation that is obtained. What steps do you need to take if you change jobs during the loan agreement?
Banking services are characterized by their rather specific characteristics. Unlike parabanks, they have a highly standardized system of requirements. When applying for any type of financial product in a bank, you can always expect a few regulatory points, which must be met by the consumer.
Constant requirements when applying for a loan
Let’s focus on loans to individuals. In the case of both consumer and mortgage loans, these permanent requirements are as follows.
- Having adequate creditworthiness. Banks expect from their clients an impeccable history of repayment of existing liabilities (loans, payday loans, bills, installments). In addition, it is also important not to have current as well as overdue debt. All these parameters will be checked in financial registers, such as BIK (Credit Information Bureau). Some banks may also visit, for example, BIG (Economic Information Bureau) or the ZBP (Polish Bank Association) database.
- Permanent employment. In addition to showing good creditworthiness, bank branches also expect other collateral. It is an employment which the consumer will have to prove through documents and certificates. Banks usually require employment for at least 3 months under an employment contract or other slightly longer periods (accepted by the bank) in the case of a mandate contract or a specific task contract. The consumer will have to provide a certificate from the employer, an account statement proving income from remuneration and the fact that the contract will be valid for the nearest months specified by the bank (if it is a fixed-term contract).
Permanent employment – an important aspect for every bank
Therefore, after the second of the above-mentioned aspects, it is clearly visible as important the collateral for the bank is the issue of having stable and stable employment. This is a form of confirmation that the consumer will have regular access to a sufficient amount of cash to pay the liability.
If the bank assesses that the documents and certificates provided are sufficient, a positive credit decision is only a matter of time. However, life often shows that the successful completion of the verification process before obtaining a loan often does not mean that the repayment stage will be without complications.
Change of job after signing the loan agreement
During loan repayment, unexpected random events often occur unexpectedly. The group of the more troublesome is the appearance of expensive household expenses, illness, accident, financial problems, as well as job loss.
Many consumers are also anxious about changing jobs during the loan period. Finally, when they applied for the liability, they submitted documents regarding their current work to the bank. As mentioned in the above information, the creditor collects information about the time for which the contract has been concluded. This can be read as proof of the stability of your employment.
However, for random reasons that will occur over the life of the loan, you may need to change employment. The workplace ends its activity, the number of jobs is reduced, the employee is forced to leave the workplace due to eg abuse of the employer or simply receives a better salary offer.
Consumers’ concerns are often even greater when talking about a mortgage – which is given after a large amount of formalities and for high-value property. It is even worse if the work was changed before the declared period, eg 3 months.
What attitude do banks have to change jobs after signing the loan agreement?
The attitude of lenders to situations when the consumer changes employment after signing the loan agreement is not homogeneous.
- Some banks develop special clauses on the loan agreement, asking the borrower to inform the bank in the event of a change of job. The form of providing this for information (eg by phone or email) should be specified in the contract by the bank.
- Other banks may also not require information on changes in employment at all. In such a situation, it will be crucial for them that the consumer maintains continuity of employment and thus – sources of income with an appropriate amount that will allow for easy repayment of loan installments.
For banks it may be more important to lose and not change jobs
For banks, the main problem is primarily the lack of timely repayment of loan installments. There are often months of delays associated with this. They mean for banking institutions the necessity to undertake extensive and time-consuming activities in order to enforce receivables.
Therefore, loss of employment may be a more problematic situation. It means not only the loss of a regular source of income for the consumer and the resulting risk of a collapse of the financial situation, but also potential problems with repayment of installments. Then, there is a high risk of falling into debt, against which the bank will undertake various debt collection activities.
Change of job after signing the loan agreement – summary
The attitude of banks to the question of changing their employment is undoubtedly not homogeneous. For this reason, as part of prevention, it is worth while reading the loan agreement. There, it will be worth learning the content of any clauses defining the bank’s activities and attitude to unexpected events. In this case, we are talking about a situation when the borrower will have to change jobs.
Knowing the content of such a clause, in the event of a change of employment, you will know the scope of actions that will be necessary to take. As a reminder. It is possible that you will need to inform the bank in writing or by phone about this situation. It may also be that the borrower will not have to take any explanatory action. It all depends on the bank and the exact content of the loan agreement signed at that time.