Ever wondered if personal loans are just a ‘9-to-5 job’ thing? Well, guess what? A personal loan for contract employee is within reach for those without a traditional payslip!
From slicing through the confusion to unlocking the secrets of loan success, we’ve got your back every step of the way.
So, if you’ve been eyeing that dream purchase, this is your ticket to understanding the ins and outs of personal loans for contract employees. Without further ado, let’s dive right in!
Personal Loan Challenges for Contract Employees in Malaysia
Applying for a loan in Malaysia is like embarking on a financial journey, and for contract employees, the path can be a bit bumpy.
However, with the right understanding, you can navigate the loan landscape and ensure your financial aspirations align seamlessly with your dynamic career.
1. Variability in Income and Job Security
In contrast to permanent employees, contract workers might find themselves chasing opportunities, taking on new gigs, and dealing with periods of uncertainty.
As such, the latter often face fluctuating income levels and may not have the same job security as permanent employees. Why does this matter? Essentially, banks have a soft spot for stability.
The primary issue that contract staff face is that companies reserve the right not to renew their contracts when they expire.
This holds true even if an employee has been under contract for a lengthy period, such as ten years.
Therefore, if you are a contract employee employed for more than two years and your contract was recently extended, the bank will still consider your income.
However, if your contract has not been renewed, you will need to establish a more comprehensive financial profile.
2. Non-Standard Income Streams
Instead of relying on a single employer, contract employees may earn income from variegated sources, such as freelance work, consulting, or project-based assignments.
These income sources deviate from the predictable salary structure associated with permanent employment.
As a result, banks might find it challenging to assess the stability of these non-traditional income streams that do not adhere to the traditional mould.
After all, banks have honed their processes around regular income patterns.
How to Secure Personal Loans for Contract Employees in Malaysia
Eager to enhance your credibility in the eyes of banks and financial institutions? Be sure to take note of these five practical strategies to elevate your chances of personal loan approval.
By following these strategies, you’re not just increasing your odds of approval; you’re setting yourself up for a stronger financial future in Malaysia.
1. Provide Employer Verification
As a contract employee, showcasing your income stability is paramount. To do so, provide a detailed and verifiable statement of your income from your contracting employer.
This establishes your income stability and shows banks that you have a consistent source of earnings. Ensure your statement includes vital details, such as:
- The duration of your contract.
- Your hourly, daily, weekly, or monthly rate.
- Any guaranteed minimum income.
- Contact information of a company representative for verification.
2. Improve Your Credit Score
Keep in mind that your credit score is your financial resume. Maintaining a healthy credit score can significantly impact your loan approval chances.
Regularly check your credit report to catch any discrepancies and address them promptly. A higher credit score indicates financial responsibility, making you a more attractive candidate to banks.
3. Build a Longer Work History
A lengthier work history can make you appear more stable and reliable. If possible, consider applying for a personal loan after accumulating a substantial track record of successful contract work.
A more extended work history demonstrates your ability to consistently secure contracts, ultimately elevating your eligibility for a loan.
4. Prove Your Financial Stability
Banks often seek assurance that you have a reliable financial cushion to manage loan repayments, especially when dealing with variable income. Demonstrating financial stability comes in different forms, including:
a. Healthy Savings Account
Regularly contributing to a savings account and maintaining a comfortable balance reflects your financial management skills and provides a safety net during income fluctuations.
b. Emergency Fund
Accumulating several months’ worth of living expenses in an emergency fund serves as a sign to banks of your financial prudence and readiness to face unforeseen circumstances.
c. Asset Ownership
If you own valuable assets like property or investments, these can act as collateral or additional evidence of your financial stability, reassuring lenders of your ability to handle loan obligations.
2 Personal Loan Alternatives for Contract Employees in Malaysia
1. Credit Cards
Credit cards are a widely used financial tool that enables you to borrow money up to a certain credit limit. They are typically used for covering various expenses, including unexpected ones.
Many credit cards come with attractive rewards or cashback programmes, which can provide additional perks to cardholders. These benefits can include cashback on purchases, travel rewards, discounts, and more.
While credit cards offer convenience and rewards, they also come with the potential for high interest charges if you fail to manage them responsibly.
Thus, it is crucial to pay off the card balance in full each month to avoid these interest charges and maintain a healthy financial standing.
2. Home Equity Loans
Home equity loans, also known as second mortgages, are secured loans that use your home as collateral.
These loans are typically used when you want to borrow a significant amount of money.
The reason home equity loans often have lower interest rates compared to unsecured loans is that they are secured against your property.
This means that if you fail to repay the loan, the bank has the right to claim your home as collateral.
The substantial amount you can borrow through a home equity loan depends on the equity you have in your home.
These loans usually come with a fixed interest rate, which means consistent monthly payments.
How Bluebricks Can Help with Personal Loans for Contract Employees
When it comes to personal loans for contract employees, navigating the financial landscape requires a strategic approach, financial savvy, and informed choices.
Bluebricks is a trusted name in the financial industry in Malaysia. We are committed to your financial well-being and strive to foster lasting partnerships with our clients.
Whether you are looking for a personal loan to consolidate existing debt or cover unexpected expenses, Bluebricks is here for you every step of the way. Our solutions include:
- Personal loan rejected services
- SME loan rejected services
- Mortgage loan rejected services (for buying a new home, refinancing and cashback purposes)
- Collateral loan services
Personal Loan for Contract Employee Services
Our mission is to empower individuals, including contract employees, to achieve greater financial resilience and freedom.
We provide the tools, knowledge, and resources you need to take control of your financial future, tailored to your unique circumstances, such as:
- The specific loan amount you require.
- The urgency with which the loan amount is needed.
- Whether you or your parents own a property that has been held for over ten years.
- Your income level.
- Your CTOS score (such as your credit score and credit history).
Personal Loan for Contract Employee – FAQs
To offer a clearer understanding of personal loans for contract employees in Malaysia, we’ve compiled a list of frequently asked questions and provided comprehensive answers below.
Yes, contract employees can qualify for personal loans. However, eligibility criteria and terms may vary among banks or financial institutions.
Hence, it is essential to find a bank that offers personal loans to contract employees and meets their specific requirements.
Secured personal loans require collateral, such as property or assets, to secure the loan. Meanwhile, unsecured personal loans do not require collateral but may have higher interest rates.
It is pertinent for contract employees to consider their financial situation and risk tolerance when choosing between these options.
The approval timeline can vary depending on the bank and the complexity of your application.
In some cases, you may receive a decision within a few business days, while others may take longer to review your application and verify your income.
If your application is rejected, consider reviewing your financial situation, improving your credit score, and exploring other banks or loan options that may be more suitable for your circumstances.
It is also best to seek professional assistance from a specialised bank loan and debt consolidation agency such as Bluebricks for feedback on why your application was declined.