Loans for civil servants – what makes them so special?

Loans for civil servants – what makes them so special?

Loans for civil servants count as “safe lending” for all credit providers. Officials usually have the best credit rating. Many banks literally roll out the red carpet and offer B-tariff credit.

In addition, the community of life insurers looks very specifically at life officials as borrowers. In the past, the civil servant’s loan, which was due at the end of the day, was used to finance many a civil servant’s houses.

We want to make sure that you, as a civil servant, do not let yourself be tempted to trust in “traditional”. Our goal is for you to apply for the civil servant loan that gives you benefits.

Loans for civil servants – what makes them so special?

Loans for civil servants - what makes them so special?

From the perspective of every credit provider, loans for civil servants are considered to be particularly secure. Credit security ensures that the state receives particularly good remuneration, even if officials don’t like to hear it. Compared to an equivalent professional position in the private sector, civil servants often earn more and, above all, safer money. Which is the second reason why many loan providers have been offering special conditions for loans to civil servants for decades?

The State, as an AAA debtor, is behind its promise to pay the salary on time. In no private-sector company, employees should be so sure that at the payment date, the income actually appears on the account. In addition, no other employee can be sure that he will keep his job until retirement. Civil servants are considered “pure security”.

From the day of his lifetime appointment to death, the state ensures his lifetime officials against almost every life risk. Inferring this greatest possible security of supply and an adequate income level, loans for civil servants are considered safe. This finding is of course not new. For example, loans with a B tariff and civil servant loans from an insurance company have practically automatically offered the cheapest loan.

Life Insurance Civil Service Loans – What Has Changed?

Life Insurance Civil Service Loans - What Has Changed?

When civil servants wanted to build or buy a house at a young age, the official loan from an insurance company was always a good decision. The insurance premiums remained manageable due to the low entry age. Only interest was paid on the end-of-term loan. The repayment, an otherwise very stressful part of the monthly loan rate, was made in one sum on the due date.

The somewhat higher interest rates compared to a mortgage loan were also easy to live with because there was a guaranteed profit sharing. It later reimbursed a lot of money and was almost like an additional pension with a one-time payment. Loans for life insurance officials, from today’s perspective, are hardly worthwhile. Life insurers would probably even be in a serious predicament today.

The guaranteed interest rates were only unilaterally overridden by law changes. Thanks to the ECB’s zero interest rate policy, insurers were no longer able to actually earn the originally guaranteed interest rate. The lack of reimbursement takes away the charm of the old-style civil servant loan. On the cost side of today’s financial statements are taxes on the payout date, high current interest rates and a lack of surpluses.

Special offers – B tariff loans

Special offers - B tariff loans

With the B tariff for civil servants, house banks and online specialist providers advertise. B tariff credit means that the credit institution offers an additional interest discount for civil servants. In this way, the lender pays tribute to the extremely good creditworthiness of the civil service. Nevertheless, it would be almost negligent to motivate the general interest rate discount to forego a loan comparison.

Statistically, small loans of up to 3,000 dollars are among the most common loan requests. If this loan amount were financed through a provider that specializes in loans for civil servants, the bank would, of course, offer the B tariff. Without a B tariff, a credit of 3,000 dollars, a 36-month term, and 4.75 percent APR. With the B tariff, the effective interest rate falls to 4.55 percent. In this case, the financing costs a total of 219.84 dollars interest.

Loans for civil servants are of course also happy to lend to credit institutions that are not targeted at public sector employees. There is therefore no option for a B tariff. The desired small loan would be requested via a free credit comparison to apply at an interest rate of 1.79 percent APR regardless of the creditworthiness. Even without a B tariff and at “everyone’s interest”, a total of 82.82 dollars in financing costs would be paid.

Conclusion – loan comparison for civil servants

Conclusion - loan comparison for civil servants

The small example does not, of course, prove that civil servants can no longer benefit from their loans through special providers and B tariffs. An example of this would be credit requests with a term of more than 120 months. In this case, it is the special offers that allow loans for officials with long terms.

The small comparison should encourage much more to compare. Discovering eligible loan offers at low interest rates as a civil servant is not difficult. Nevertheless, the flood of offers entices to give away cash due to a lack of comparison. In the example, it was “only” 137.02 dollars saved by a credit comparison in a matter of seconds.

With a little more time, a non-binding advance credit request for credit-dependent interest offers, much higher savings potential would be realizable. For example, a loan of USD 15,000, 48 months, would be taken out at 1.89 percent instead of 4.55 percent APR. Comparing loans for civil servants in this example would result in interest savings of USD 824.16.