Officials are often said to be fairly cozy and quiet contemporaries, who have little stress at work, have a good income and are practically irrevocable. Then retire at some point, receive a full pension and can enjoy the end of your life to the fullest.
Certain of these characteristics and allegations certainly apply to many officials. Others are more from the area of legends and fairy tales. What is true, however, is the fact that civil servants have excellent borrowing opportunities due to their special professional status. Because with their permanent and really almost permanent employment they bring with them a very important security for borrowing. And banks like to honor this with particularly cheap offers.
What are government loans and how do they work?
Official loans offer particularly favorable conditions which – as the name incorrectly suggests – are not only accessible to civil servants. Academics or civil servants can also benefit from such loans and the associated favorable conditions. The reason for these special conditions is job security. It reduces the risk of default on repayment and allows the banking houses. To provide not only low interest rates, but also particularly high loan amounts in combination with very long terms. So whoever can take out loans for civil servants has drawn a lot in the eyes of many other consumers.
Many professional groups benefit
Police officers, teachers, civil servants, professional soldiers, judges, postal officials, judicial officers and even retirees can benefit from a civil servant loan. You enjoy the multiple protection that comes with such a loan. This means that the monthly installments that must be paid after the loan is taken out are not simply added to the loan. Rather, they are saved in a life insurance or pension policy. Only the interest that has to be paid flows into the loan. The insurance is only terminated at the end of the term and the money saved in it is added to the loan. If the insurance company was able to generate a surplus, it does not flow into the loans for civil servants, but is paid out to the borrowers. So it may well be that as a borrower you can also earn money with the loan. The insurance also provides financial security for the family in the event of the borrower’s death.
Where can official government loans be taken out?
Officials are offered the same range of credit as any other consumer. Only on much better terms. Therefore, a loan for a consumer can always be taken out at any bank or savings bank. In addition, however, there are also special civil servant banks that deal exclusively with the interests of this professional group and have the appropriate loans. A comparison should be used to find out where the loan is taken out. Because even with these cheap offers, it is worthwhile to carry out a comparison before borrowing.
Loans are offered to civil servants, which can be up to 24 times their net income. The term can be over 20 years. Additional safeguards such as a surety are only necessary in a few cases. However, it is important that the Credit Bureau fits. If this is negative, an official will not get a loan from a bank in Germany. Official status must be demonstrated when applying. Trial officers receive separate loan offers that are adapted to their current situation and take into account that the civil service has not yet been fully completed.
By the way: Officials can also take advantage of debt restructuring. This is particularly worthwhile for very large loans that have a very long term. It is important that the loan provides for the possibility of debt restructuring and that there are no fees for this. This must be explicitly stated in the loan agreement so that there are no inconsistencies and unpleasant surprises when rescheduling is planned.