The gig economy continues to expand in Sweden and challenges what we have learned about what an employment should look like. An increasing number of Swedes choose to take temporary assignments, or “gig”, instead of having a permanent job. According to a survey by GoldStep, just over every other Swedish wants a more flexible form of employment and among the 18-29 year olds, 61% can think of gigging.
With the freedom to be able to control yourself also comes some problems, not least when it comes to applying for loans. Not all players have succeeded in adapting to the change and many of the traditional banks still have permanent employment as a requirement. Today, however, there are many smaller and more flexible lenders in the market who place less emphasis on employment.
The right giggle in the right place
As a result of the gig economy, loyalty and long-term competence become less important and focus is instead placed on flexibility and excellence. An employer can hire a lender for an assignment that requires some competence – maybe it is important that the economist in a certain project understands the automotive industry? It is therefore about the right person in the right place.
According to GoldStep’s survey, 42 percent of Swedes believe that half of the population, within a ten-year period, will have other forms of employment than permanent employment. Although the movement towards a more flexible labor market has been going on for some time, it is still more difficult for those without permanent employment to get a loan granted – in some cases, even impossible.
The banks favor permanent employees
Nearly half of Swedes believe that traditional banks are more favorably disposed to borrowers who are permanently employed than those with other forms of employment. It includes not only freelancers, but also project employees and temporary workers. According to GoldStep’s report, 8 out of 10 Swedes believe that the banks should place greater emphasis on the applicant’s overall financial opportunities.
It is no wonder that banks prefer that borrowers have worked in one place for a long time. This probably means that the person is permanently employed and cannot be terminated anyway. In this way, the borrower’s income is secured and the risk is less that the loan cannot be repaid. With self-employed, however, the income is more uncertain and can vary by month.
Obviously, even smaller lenders want to take as little risk as possible when lending money. However, due to high competition in the market, these players have been forced to adapt based on customers’ conditions. Therefore, they often have a more flexible approach to employment and are better at making an overall assessment of the borrower’s financial situation.
Increase the chances of loans without permanent employment
Although there is no requirement for permanent employment, there is always some form of income requirement. The amount required varies between different lenders, but is at least USD100,000 per year. If your annual income exceeds the requirement and you meet the other conditions that the lender has, you should have no problem getting a loan granted even though you are a giggler.
However, it should be said that without a permanent employment, a good credit rating becomes even more important if possible to get a loan, and at a low interest rate. The ones that can reduce creditworthiness are current liabilities, current credits and payment remarks.
Another way to increase the chances of a loan without permanent employment is to compare different lenders, as the conditions may vary widely. However, applying for a whole range of lenders can be counterproductive as many credit information in the registry lowers your credit rating. One possibility then is to apply to a loan broker who collects offers for you.