If the money does not reach the end of the month, the belt must be tightened. Ongoing costs such as rent, electricity and insurance want to be paid. The consumer also incurs costs for the trip to work. Sometimes unforeseen events drive up expenses, leaving room for restrictions elsewhere. If the washing machine suddenly gives up the ghost or an expensive car repair is pending, quickly a few hundred euros may be due. Today, parents incur high costs for their children’s education – amounts that can vary from month to month. If a family member needs spontaneous support or celebrations such as a wedding, the monthly budget is simply not enough. Very few people think that a personal loan or a small wedding loan could be considered.
A number of medical supplies that used to be standard are offered only for a fee. If you want to be efficient and keep your health at a high level, you will not be able to get around with one or the other additional payment from the doctor or dentist. Keeping a budget booklet makes it easier to keep track of monthly expenses, but even if the budget is well planned, there may be a short-term need for a loan. Often it is about manageable amounts. Not infrequently, 1,000 or 2,000 euros are enough to remedy the current financial emergency. But this money is needed. Like companies, private individuals also need to remain liquid to meet payment obligations and not slip into the red in the long term.
The installment loan – not always the best solution
When looking for offers for a short-term short-term payday loan, the consumer often encounters difficulties. The lead times for issuing a classic installment loan are sometimes quite long and the application cumbersome. Whether the desired loan is issued and when the payment is made, the employee does not yet know when applying. Prior to a loan commitment, the funding institutions conduct a comprehensive credit check of the applicant. This usually includes the Schufa query. Even if there are no negative entries, the granting of the loan can be denied.
For the applicant, the scoring of the lenders remains opaque, as he is not informed of the reasons for a cancellation. Classic installment loans are issued only from a loan amount of about 5,000 euros. However, many workers need a short-term payday loan for an amount in the lower four-digit range. This segment is not covered by the big financial institutions. The conventional alternatives are unattractive. And if the employee covers his debit at the house bank or if he charges his credit card, high interest rates are incurred.
Advance or employer loan?
A way out of this dilemma can be the employer loan. This loan can be granted to the employee by his employer. Since there is already a personal and contractual relationship between employer and employee, the provision of a short-term payday loan is easier and in many cases less bureaucratic. The employer loan is not to be confused with an advance, ie an advance payment on the salary. An advance is limited to the amount of the monthly salary and is subject to the same deductions as the salary payment. Wage tax and social security contributions reduce the amount of the advance payment directly.
Therefore, the advance is not a particularly attractive model for the employee. An employer loan is also more favorable for the employer because, in terms of accounting, it prepares less expenditure than an advance. The employer loan is a term loan repaid through deductions from net pay. Deductions for income tax or social security are not due. Incidentally, when granting the loans, the employer must not discriminate between individual employees. If an employee has already been granted an employer loan, another employee is entitled to it. Excluded are employees who have already submitted their dismissal or are highly indebted.
Loan agreement, allowance and interest
As with any online loan, the terms and conditions of the employer loan are also set out in a written loan agreement. These include the amount of the loan, the term, deductions from the net salary and any interest. It also has to be clarified by contract how the loan will be repaid if the employment ends before repayment. In the case of companies with a works council, employee representatives must also be informed and included in the decision-making process. Employer loans are to be treated confidentially by all involved. There are no legal limits for the amount of the employer’s loan. Up to a tax allowance of 2,600 euros, the employer can waive interest. A motive for the interest waiver is often the appreciation that a boss would like to send to a loyal employee. Above the free allowance, the interest on the employer loan must be based on the market rate of interest. As a pecuniary advantage, the effective interest rate of the Deutsche Bundesbank is used. This interest rate may be reduced by 4%.
Disadvantages of the employer loan
An employer can freely decide whether to grant his employees an employer loan. Employees therefore have no legal entitlement. But even with a fundamental willingness of the employer, the application for an employer loan is easy to think about. There are several reasons against the employee loan.
Although the conclusion of an employer loan is confidential, many employees are uncomfortable with indirectly informing the boss about their financially precarious situation by applying for a loan. Privacy is a great asset, and that includes your personal financial position.
2. dependency ratio
An employer loan binds the employee to the employer, since, if terminated, depending on the terms of the contract, he would be forced to repay the loan prematurely. In addition, an employee may also feel a moral obligation to continue to make his workforce available to the employer. The motivation to change jobs disappears. This gives the employee opportunities and neglects its development.
3. career obstacle
An employer can consciously or unconsciously treat a worker to whom he has granted an employer loan differently than his colleagues. When an employer sees the apparent financial hardship of an employee as instability, he often fears a negative impact on their productivity. When filling managerial positions in the company, he may exclude a borrower from the outset as he regards his financial position as an uncertainty factor.
4. Unequal eye level
The hierarchies in companies are becoming increasingly flatter and bosses and employees are working together in many companies today. In particular, the younger generation has shed the classic dependency relationship with the employer and aims for a relationship on an equal footing. Employers and employees are increasingly seeing themselves as equal partners on time. This modern understanding of the relationship in the workplace is opposed by the employer loan, because it is based on the employee’s traditional dependence on the “breadwinner”.
Discreet and tailor-made – the short-term payday loan
An attractive alternative to the employer loan is the application for a short-term payday loan with us, we are specialized in short-term payday loans up to a sum of 3,000 euros. The application for short-term payday loans is more informal and the payment is made in 3-4 days or you use the express option. This allows you to get the money you need urgently through the employer and meet your payment obligations.
Due to the small amount, the repayment is also fast on the stage. You do not have to worry about long-term debt either. The short-term payday loan – also called Fast Credit – is just as discreet and secure as a conventional installment loan. Neither employers nor anyone else except you will be notified of the loan. With the short-term payday loan you secure a high degree of independence, because you do not have to act as a petitioner to your employer.