4 ms·

Could somebody please let the banks know that "work is being unbundled from traditional employment"? At least in Europe, I am afraid they still expect your empl

Could somebody please let the banks know that "work is being unbundled from traditional employment"? At least in Europe, I am afraid they still expect your employment to be quite traditional (or your collaterals to be quite valuable) if you want to get a loan.

chrisseaton 5y ago
When I've applied for a mortgage and things they've always just looked at my income not my employment. Like most people I've got multiple little incomes and you need to consider them all.
- Balero 5y ago
  In the UK they looked at employment first, and some sort of secondary income separately. > Like most people I've got multiple little incomes and you need to consider them all. I was also a little skeptical about your usage of most here, but wasn't sure if that was because I am in a bubble. For the UK it looks like about 4% of people are in second jobs. Do you think this differs where you are? - Workers with second jobs UK: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/timeseries/ycbw https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor... - Number of workers UK: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/november2021 https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor...
  - deleted 5y ago
    [deleted]
  - sdze 5y ago
    Same here in Germany. They even check employment duration.
- PopAlongKid 5y ago
  In the U.S., if you can produce one or more W-2 tax forms (annual report of wages paid) adding up to about a full-time job, the banks check it off their list and move on to the next item. However if you are self-employed, they want multiple year copies of your detail business income tax form, and letters from your accountant or tax preparer stating that your business is profitable, viable in the future, etc (which is just the banks trying to meaninglessly off-load some of their risk to a 3rd party).
ravenstine 5y ago
How are they supposed to make a profit on delinquency fees and high interest rates if you're capable enough to generate your own revenue? ;)
moffkalast 5y ago
Yeah that is quite the downside. As someone living in the EU working a remote job for a foreign company on an hourly basis it's impossible to get a loan. Credit score doesn't exist and banks tell you to go fuck yourself if you don't have a full time job. Hell they even limit you to like 300€ per month on credit cards, I had to start using a prepaid card to actually pay for anything.
betwixthewires 5y ago
Sort of a side tangent, but what banks are looking for specifically is demonstrable collateral for a loan that they can get access to, and the risk landscape is such that they're very constrained in what type of collateral this is with regard to people without a lot of capital. They look for employment because that's where most of the risk can be offloaded to. What would be nice to see would be forms of collateralized loans where the lender doesn't have to take custody of the collateral until default, which requires that they can actually take possession at a later date. We see this with homes, equity loans and the like, primarily because homes cannot be moved, but more importantly because lenders have a way to stop a sale before the loan is paid. With assets that can be moved around it is much harder, but imagine a scenario where for example, you can borrow against stock or a CD or something else, and the lender never touches the asset but becomes entitled to it if you default. This would significantly reduce lender friction and allow more people to take out loans with more different sources of income.

chrisseaton 5y ago

When I've applied for a mortgage and things they've always just looked at my income not my employment. Like most people I've got multiple little incomes and you need to consider them all.

Balero 5y ago
In the UK they looked at employment first, and some sort of secondary income separately. > Like most people I've got multiple little incomes and you need to consider them all. I was also a little skeptical about your usage of most here, but wasn't sure if that was because I am in a bubble. For the UK it looks like about 4% of people are in second jobs. Do you think this differs where you are? - Workers with second jobs UK: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/timeseries/ycbw https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor... - Number of workers UK: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/november2021 https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor...
- deleted 5y ago
  [deleted]
- sdze 5y ago
  Same here in Germany. They even check employment duration.
PopAlongKid 5y ago
In the U.S., if you can produce one or more W-2 tax forms (annual report of wages paid) adding up to about a full-time job, the banks check it off their list and move on to the next item. However if you are self-employed, they want multiple year copies of your detail business income tax form, and letters from your accountant or tax preparer stating that your business is profitable, viable in the future, etc (which is just the banks trying to meaninglessly off-load some of their risk to a 3rd party).

ravenstine 5y ago

How are they supposed to make a profit on delinquency fees and high interest rates if you're capable enough to generate your own revenue? ;)

moffkalast 5y ago

Yeah that is quite the downside. As someone living in the EU working a remote job for a foreign company on an hourly basis it's impossible to get a loan. Credit score doesn't exist and banks tell you to go fuck yourself if you don't have a full time job. Hell they even limit you to like 300€ per month on credit cards, I had to start using a prepaid card to actually pay for anything.

betwixthewires 5y ago

Sort of a side tangent, but what banks are looking for specifically is demonstrable collateral for a loan that they can get access to, and the risk landscape is such that they're very constrained in what type of collateral this is with regard to people without a lot of capital. They look for employment because that's where most of the risk can be offloaded to. What would be nice to see would be forms of collateralized loans where the lender doesn't have to take custody of the collateral until default, which requires that they can actually take possession at a later date. We see this with homes, equity loans and the like, primarily because homes cannot be moved, but more importantly because lenders have a way to stop a sale before the loan is paid. With assets that can be moved around it is much harder, but imagine a scenario where for example, you can borrow against stock or a CD or something else, and the lender never touches the asset but becomes entitled to it if you default. This would significantly reduce lender friction and allow more people to take out loans with more different sources of income.