The attractive loans for civil servants can be used both for civil servants for life and for probation officials, but also for civil servants of equal status. The professional groups include, for example:
- professional soldiers
- police officer
- law enforcement officials
- Employees in the public sector
The security of the income is essential in the assessment, because the inability of the federal government or the federal states to pay can in fact be excluded. In addition, the options for layoffs for civil servants or civil servants are significantly more limited than can be seen in the free economy.
Are there exclusion criteria for an official loan?
Even if the acceptance guidelines for civil servants are significantly more moderate, credit information is generally obtained from Credit Bureau or a similar credit agency. If there are negative entries that are caused, for example, by foreclosures or canceled loans, accounts or credit cards, an official loan is also rejected. Current loans, on the other hand, are not a negative feature.
If the liabilities are serviced regularly and reliably, on the contrary, this speaks for exemplary payment behavior and, above all, for the serious and experienced handling of financing. In addition, of course, the remaining free liquidity is important for the loan decision, because the bank must also check the possibility of payment in installments for an official loan.
How much can a loan be granted to civil servants?
In contrast to the usual credit check, the amount of a civil servant loan is based on the monthly payments. In most cases, the maximum loan amounts are between 20 and 24 times the monthly net income – completely irrespective of the purpose.
It is only ensured that there are no further financing liabilities or that the official loan is used to pay them off. Vehicle financing or leasing contracts and construction financing are expressly excluded from this.
What terms can be agreed with an official loan?
With terms between 12 and 20 years, the fact is taken into account that a civil servant loan is usually repaid with a private life or pension insurance. Over the entire term of the loan, civil servants only have to pay the very low interest rates in order to save capital-forming insurance in parallel, with which the repayment is to be paid when the loan expires.
Of course, borrowers are free to repay the loan in several or one amount significantly earlier. The contractual regulations are so flexible that both a monthly repayment installment and a replacement at the end of the process are possible.
Do special collateral have to be provided?
Another special feature of loans for civil servants is the recognition of the earnings as sufficient security. In principle, there is a silent assignment of salary, but this only applies if the borrower falls behind with the interest rates due.
In this case, the responsible salary office is signaled that the payment obligations should be deducted directly from income and paid to the bank. The concluded capital-forming life or pension insurance provides additional security for the bank and surviving dependents.
How are the conditions for civil servant loans compared to the market?
Since the amount of the loan interest is based on the current key interest rate on the one hand, and on the other hand depends directly on the creditworthiness and income security, civil servants can fall back on very favorable conditions. Of course, loan interest varies depending on the term. For these special loans, however, you are always at the bottom of the current interest rate table.
Another advantage is that the agreed interest rates apply for the entire term of the loan agreement. The enormous security for the borrower, who can therefore calculate the costs firmly, should not be underestimated.
Summary – Characteristics of an official loan
- Maximum loan amount depending on net withdrawals
- 20 to 24 times the monthly net income possible
- Term between 12 and 20 years
- Repayment suspension or installment payment can be selected flexibly
- Compulsory life or pension insurance
- Favorable conditions
- Apply for the entire term
What documents need to be submitted for the credit check and application?
In order to have the possibilities of a loan for civil servants examined or to apply for it, the respective bank needs:
- the official’s certificate or the employment contract,
- the settlement of the remuneration,
- a self-disclosure,
- a resume,
- consent to a query from Credit Bureau.
If there are already credit liabilities, the contract copies must be attached in order to either arrange for the redemption or to take the monthly charge into account when considering liquidity.
Loan as an official – cheap and flexible
In contrast to many installment or consumer loans, civil servant loans have very favorable terms, can be granted to a much higher degree and are very flexible in terms of the contract. However, since interest rates also depend on the general market situation, regular research is worthwhile.
The ceded life or pension insurance can be provided with adequate death insurance or effective protection in the event of incapacity for work or service, depending on personal needs. If the loan is redeemed early, the insurance is available to the borrower.
Overall, it must be assessed that civil servants and employees of the public service can benefit from numerous advantages that the special characteristics of the respective employer open up.