In the past, a lot of people hesitated to take out a loan, but now there has been a significant change due to the low interest rate policy. According to the Schufa database, around 15.5 percent of the total population in Germany had an installment loan in 2019. For example, while the self-employed often have difficulty getting a larger sum from a financial institution, civil servants are among the preferred borrowers.
What is a civil servant loan?
The term is used colloquially. It stands for lending to public employees and civil servants. A civil servant loan has only one small difference to a “normal” installment loan: the aforementioned employees receive it at more favorable terms than employees in other professional groups or the self-employed. The reason for this is the generally very good credit rating. As a rule, they are either impossible to cancel or difficult to cancel. This reduces the credit institutions’ risk of default. This is positively reflected in the conditions granted.
Civil servant loan / loan – who can be a beneficiary?
- Academics who have been employed for at least five years, either at a college or university
- Public service employees who cannot be dismissed
- Officials on probation
- Officials for life
- Civil servant candidates outside the probationary period
- Retired officials under 60 years of age
- Federal judge
- Professional soldiers
Benefits for civil servants and employees in the public sector
The pluses of a civil servant loan compared to other borrowing usually include:
- lower interest rate, consequently lower monthly payments
- longer terms, because from the bank’s point of view, these are low-risk financial transactions, which also leads to relatively modest monthly payments
- Allocation of higher sums of money, also for the aforementioned reason
- Use is not earmarked, which makes borrowers extremely flexible
- By taking out life insurance, it is possible to benefit from surpluses that are credited to the policyholder
- Relatives can be covered by taking out life insurance that includes survivors’ insurance
Even if loans for civil servants and employees in the public sector generally have some advantages, the conditions differ depending on the bank. The loan comparison portal smava enables all potential borrowers to compare the best offers with one another. At the same time, interested parties benefit from free advice and Schufa neutrality. This means that credit comparisons can be made at any time, the Schufa score remains unaffected.
Differences between official loans and loans
In private parlance, the two terms are often used synonymously. However, there are differences:
Civil servant loan
It goes hand in hand with the so-called final maturity, ie the loan amount is not repaid during the term in installments, but on a fixed date in the total amount plus interest; a life or pension insurance runs in parallel, the resulting investment income is used for replacement
Civil servant loan
It requires the monthly repayment of the loan amount including interest up to full repayment
Usage options for civil servant loans and credits
Almost without exception, they are awarded without any specific purpose. This is not the case with many consumer loans, which can already be seen from the respective names such as car and education loans. Thus civil servants and employees in the public service have more freedom in the use of their loan or credit. The advantage is that you only have to conclude a corresponding contract once and can use the sum for both a property purchase and a vacation, for example.
In addition, it is possible to use the loan or loan amount for a debt rescheduling. Before doing this, the following should be noted:
If the bank in question demands a prepayment penalty, debt rescheduling is sometimes more expensive if the old contract is terminated and a new credit / loan is taken out.
Therefore, it should be carefully weighed up beforehand whether such an approach actually makes sense.
Basic requirements for obtaining it
It does not matter whether you intend to take out a civil servant loan or a civil servant loan: All applicants must meet the same requirements as private individuals for a classic type of financing. These are among others:
- Of legal age
- Bank account and place of residence within Germany
- Proof of the existence of the civil servant status or the activity in a similar employment relationship (see above)
A basic condition for the granting of the application is that the borrower is free of debt. Any earlier financing must be repaid in full in any case. Furthermore, the creditworthiness of the applicant is checked by the financial institution. In this way, the monthly cost of living is compared with the regular income.
Tips for finding an individually suitable civil servant loan or loan
The proliferation of the Internet has meant that more and more people in many areas of our lives manage countless matters online. From purchases to account opening to borrowing – processing via the network offers the highest level of convenience. The comparison of products or services is also easier than ever thanks to digitization.
If you want to compare loan offers explicitly and without spending a lot of time or effort, you cannot avoid using a comparison calculator. Comfortably from the couch at home, during your lunch break or on the go by public transport, you can quickly and accurately find the ideal civil servant loan for yourself. As a rule, you only have to enter the amount of the financing and the desired term.