Taking out a loan privately without an employment contract is quite possible, especially if the lender is in a friendly or related relationship with the borrower. Personal loans are often used as an alternative to bank loans because the loans on a private level have advantages.
Loan without an employment contract
Financial loans from friends and acquaintances are generally not tied to any interest burden, which is why the total costs for the borrower are as low as possible. Loans from the private environment can also be adjusted relatively freely between the two participants, even a burst rate will not directly doom the borrower if he can explain his situation and the reason for the burst rate to the lender.
Dunning costs and other fees do not apply to the private loan without an employment contract, which also significantly reduces the total cost of the loan. In addition, a loan without an employment contract and therefore without income via the banking channel is not possible anyway, which is why private lending is often the only way out of a financial emergency for those affected.
Because a personal loan can be easier to obtain than a bank loan. If the intended guarantor borrows the money, he keeps a better overview of the debts and often takes less risk because private loans are usually relatively low.
No employment contract, but a personal loan
People from the immediate vicinity who act as lenders usually ignore the bad creditworthiness of the borrower if the borrower is in a friendly or family relationship with the lender. Then it is much more the individual relationship to each other and the possibility of being able to help a connected person out of a financial emergency.
Since private lending is based on the lender’s private assets, private loans are generally relatively low, although the borrower’s environment also plays a role here. Taking out a loan privately without an employment contract is also independent of the Credit Bureau, since other private individuals have no insight into the Credit Bureau of other people.
Although the borrower can request a copy of his or her excerpt from the Credit Bureau, this is rather uncommon if the loan is issued in the knowledge that the borrower does not have an employment contract. The procedure is a little different for credit portals dealing with private loans among strangers.
There is no personal connection between the two participants of the loan, which is why interest, often of a not insignificant amount, is definitely required. It may also be necessary to provide security to the lender.