Those who work in the public sector often have a significantly better starting position with banks and credit institutions when it comes to granting loans. A loan for civil servants is therefore often more advantageous in terms of conditions, as there is a regular income in sufficient amount, which is one of the most important credit rating for banks.
The official loan
Civil servants are welcome customers at banks, as their professional status can be linked to a stable and, above all, secure income. Those looking for a special loan for civil servants will quickly find what they are looking for in the so-called civil service loan. This has a special feature compared to standard installment loans: In addition to the actual loan agreement, a life insurance policy is taken out, which is later used to repay the loan. In fact, this is a term loan, because during the term only interest payments, but no repayments are made.
Officials seeking a loan for civil servants may not find what they are looking for, as the civil service loan is far from having arrived at any bank. And even if, should be asked specifically for it. The extra life insurance may sound like a disproportionately high double burden in connection with the loan in the first instance, but ultimately brings benefits that speak clearly for the loan. By taking out the life insurance policy, the bank has additional security, similar to a normal residual debt insurance, which has a favorable effect on the conditions, above all the interest rate.
In contrast to a normal residual debt insurance, life insurance for civil service loans is capital-building. Although this does not reduce the contributions due to the final maturity of this loan, it may be possible to generate a surplus available to the official at the end of the term and after the loan has been repaid. This type of replacement is most comparable with a securities loan in which the loan amount is invested in the capital market. However, a civil service loan is far less risky.
Another advantage is the significantly higher transit times that are made possible by this method.
For example, a special loan for civil servants is often used to carry out long-term real estate financing, which typically lasts for several decades. Especially with such real estate loans, banks usually like to take out residual debt insurance in order to fully secure installment payments over this difficult period.
But even a relatively cheap credit brings with it conditions: A negative credit entry can also prevent a financial statements here, if the remaining installments or the remaining outstanding debt is too high and the associated term is too long.
A loan designed for civil servants can also be used for auto finance. Above all, this has the advantage that bargain rebates can be negotiated, which have a very positive effect on the own calculation or the budget due to the favorable loan conditions.
However, loans for civil servants can also be taken out without the option of life insurance. However, the conditions differ only slightly from those of normal loans. However, the applicant continues to benefit from the professional status, which also allows loans for a credit standing already burdened by ongoing obligations. A loan means for civil servants not so quickly the end of the lending, as the banks can usually rely on the current income situation.