Probationary Period and Loans...

Cuppatea1982

Hi All,

I'm looking for some advice on this. Would being three months off finishing your probationary period in work be a problem in getting a loan improved? I'm looking to borrow just over £20,000

Any information would be very much appreciated.

Thanks,

Cuppatea1982

Tixy

If you are in a probationary period I would think very carefully about taking on such a huge financial commitment of over £20k. Not just about whether you can get the loan aproved but about how you could afford it should you firm decide not to employ you as after the probation - which is far more likely in the current economic situation than it used to be.

Whilst you will probably not be formally asked whether you are in a probation period at a guess you won't have been in your job a very long time and this is likely to be a factor that would count against you in a loan application.

In truth getting a loan for that sort of amount is pretty tough for most people at the moment.

peterbaker

You may be able to usefully protect yourself to an extent with the dreaded Payment Protection Insurance (PPI) :eek: (although I am not sure after the FSA cracked down last year whether any banks are selling it in any form right now except via telephone sales team loan applications perhaps?) Alternatively an independently purchased Income Protection insurance or Blanket PPI product from an insurance broker might suit you.

You don't say how long the probation period was in total, and you do not say if you were working for another employer directly before this job so that you could perhaps satisfy a policy definition of "continuously employed".

I think pretty much all insurances that might conceivably be of use to you will require you to have been continuously employed for at least six months at the time you lose your job. That's the first hurdle, and if at the exact time you are notified of job loss you have not been working continuously for a minimum of six months or 180 days or whatever it says exactly in the small print, then most insurances of this type are useless.

The second main hurdle and this is a separate time limit to the other one I just mentioned, is that most policies will not entertain any new claim that starts less than 60 days after you buy the insurance.

The third big hurdle for some people is whether they are actually self-employed / on some kind of short-term contract or if they are truly PAYE full-time employed (the latter makes it much easier to claim).

These three are big reasons why so many PPI insurances have been missold. If you trip at any hurdle then the insurance was doomed to failure almost before it even began making it as much use as a chocolate teapot.

There are other hurdles of course, so do be careful if you explore this further.

Reading between the lines, therefore, you are like millions of others each year who are glad of a new job but fear that if you make what used to be normal mid-term commitments, that your employer will pull the rug before the end of probation.

If you can protect yourself with insurance at a price which is ok for you, and you are sure in your own mind that you can afford* the regular loan payments and the insurance premiums each month, then I suggest you simply leave it up to the lender to decide if they will approve the loan. There is no need to remind them that you are still on probation unless they specifically ask. To an extent that's part of their judgement of what risk they as a lender want to take. But remember that it is also a risk to you too.

*Do remember that proper insurance protection against involuntary redundancy if you can find it, might be designed to go much further than just protecting payments for this new loan. We all have regular commitments even before we take on new loans. If we lose our job and cannot afford those other commitments which are usually the "essentials" like food and accommodation, then if you have only protected the loan payments, then you will still be in trouble.

Do you have a mortgage as well? If so, is there any protection insurance with that? Maybe it could be started and/or extended beyond the mortgage payment amount so it also is enough to cover the new loan payment.

Fiddlestick

peterbaker wrote: »

You may be able to usefully protect yourself to an extent with the dreaded Payment Protection Insurance (PPI) :eek: (although I am not sure after the FSA cracked down last year whether any banks are selling it in any form right now except via telephone sales team loan applications perhaps?) Alternatively an independently purchased Income Protection insurance or Blanket PPI product from an insurance broker might suit you.

Most PPI/PPC require you to have been in continuous employment for a specified time before claiming.

I suspect 6 months will be far too short.

peterbaker

Why do you suspect that the 6 months I mentioned is far too short Fiddlestick ?

Unless something drastic has occurred recently that was the usual period written in to most policies.

Don't get me wrong, I am not here to recommend PPI as a naturally useful product - in the hands of untrained sales people it is a menace, but originally, before the banks bastewardised the concept, it did have value if advised correctly, and I believe 6 months continuous employment is reasonably correct general advice on what to expect from a PPI wording.

Fiddlestick

peterbaker wrote: »

Why do you suspect that the 6 months I mentioned is far too short Fiddlestick ?

Unless something drastic has occurred recently that was the usual period written in to most policies.

Sorry, I should clarify - I meant 6 months full time PERMANENT employment.

If the OP is still on a probationary period then this would not count towards the 6 months waiting period.

It might not be a condition, but it's worth them (everyone in fact!) reading the T&Cs to be sure.

Tixy

The OP asked if they would get a loan approved. I think the issue of PPI is not particularly relevant as to whether a bank would approve a loan.

immoral_angeluk

If you have only been in your employment 6 months the banks would be very wary of lending to you regardless of a probationary period..

peterbaker

Fiddlestick wrote: »

If the OP is still on a probationary period then this would not count towards the 6 months waiting period.

That's a very interesting stance Fiddlestick (one I had never heard of). Are you aware of any PPI insurer who has dared to either
(a) write it into their policy wording, or
(b) argue it to decline a claim ?

PS In these days of bastewardised marketing department produced policy wordings and "Key Facts" it may be a question of the vagaries of the Essex language, but I don't think it is correct to refer to this particular condition as a "waiting period". I think that phrase is more commonly used to refer to the (variable according to contract) first part of any claim e.g. a waiting period of 14 days of loss (e.g. unemployment) before you can expect to be paid anything at all but payment might then be backdated then to day one once the 14 day waiting period is exceeded. What do you reckon?


PPS Tixy, I think the thread answered the original question long ago - like "how long is a piece of string"? It is a question of carefully sucking to see, I think. In 2010, a large part of the workforce change their jobs very frequently. If they already have a good relationship with their bank, then how long they have been in a new job may or may not have much bearing on what the bank's computer is prepared to offer. Few retail bank staff thesedays have the knowledge to second-guess what the machine will offer, but perhaps you are one such, Tixy?

As you have also said, the more important question for the OP is whether he or she is sufficiently risk aware to know whether to accept any offer of a loan and if so, how to reduce the risk. If the OP is still keen to explore what loan offers may be available then I doubt whether anyone could or should attempt to advise them in this thread which banks to approach first to best protect their credit score. Anyone disagree and got clear views on which lenders might be "easiest" given the broad info given so far?

Fiddlestick

peterbaker wrote: »

That's a very interesting stance Fiddlestick (one I had never heard of). Are you aware of any PPI insurer who has dared to either
(a) write it into their policy wording, or
(b) argue it to decline a claim ?

Yes - the ASU protection I applied for this very morning

There is a specific exclusion if that you will not be covered if you were aware of unemployment or the possibility of unemployment within 120 days of you taking out the policy.

If you were still within a probationary period, I'd say that an insurer could reasonably claim that you were aware of the possibility of impending unemployment.

peterbaker

Ah that one

I haven't yet learned of the insurer prepared to risk his reputation or license on twisting that type of exclusion to exclude all probationers ...

It's not on, old chap

Edit: Actually, if you don't mind me asking (because the words do look like a new twist)

...you will not be covered if you were aware of unemployment or the possibility of unemployment within 120 days of you taking out the policy.

which underwriter is that?

If those words are correctly quoted, then it looks like yet another somewhat extended attempt at bastewardising the common "no claim whatsoever for something arising in first xx or xxx days" and a "no claim for anything you already knew about" clause.