A civil servant loan is a loan specifically designed for future civil servants who are still in training. For banks, civil servants are among the most interesting customers, since they have a regular income and no future payment defaults can be expected. For this reason, a loan for civil servant candidates is often offered on more favorable terms. Of course, the banks are speculating that they will later be able to offer other products to civil servants.
Loan for civil servants
Civil servants who apply for a loan from a bank are usually granted without any problems. The prerequisite for regular income is met, and if there are no negative private credit checker entries, there is no reason for the bank to refuse a loan request. Only the loan amount is limited due to the mostly relatively low income. It is checked whether the civil servants are able to pay the monthly installments after deducting the running costs.
Loans up to an amount of 10,000 USD are usually possible without problems with a corresponding term with low monthly installments. There may be restrictions for teachers who are in the traineeship. Although these are also considered to be civil servant candidates, they often later change into employment. Here the banks partly demand that the term of the loan for civil servant candidates does not exceed the period of legal traineeship.
Organization of the loan for civil servants
In principle, civil servants can avail themselves of all the loans offered on the market. Exceptions are the classic civil servant loans, which are taken out in connection with a capital life insurance. These require civil servant status or at least 5 years in the public service. Otherwise, it also applies to civil servant candidates that before taking out a loan, the existing offers should be compared exactly. Here too, the effective annual interest rate is decisive for a comparison. This includes all important costs such as interest and processing fees.
A credit comparison can be carried out in a few moments on the Internet using an appropriate loan calculator. The loan can then usually be applied for directly online. In addition to the amount of interest, borrowers should also consider a few other points when making a comparison. So it makes sense if special repayments are possible at any time. Additional payments can be used to repay the loan more quickly, which can save costs. It is also advantageous if the borrower can occasionally suspend at a rate. In this way, financial bottlenecks can be bridged better and more easily. When making a comparison, you should pay close attention to the costs that a bank charges for this service.
Loans with higher loan amounts
If a civil servant needs a higher loan amount, there is the possibility to add another borrower to the loan agreement or to provide additional security for the loan. These can be, for example, portable valuables or other collateral such as life insurance. In addition, a guarantor can also be named who will pay for the monthly installments in the event of default.