What is an official loan?
When we speak of “civil servant credit”, it is colloquially a cheap credit for civil servants and civil servants. It is not a special loan from the state, but a normal installment loan, as shown by our installment loan comparison. With the difference that these two professional groups get loans on significantly more favorable terms than normal employees or self-employed.
Banks rate the creditworthiness of civil servants and civil servants as very good. Because these groups have a secure income and are considered difficult or even irrevocable. The low risk of default is rewarded by banks when it comes to the terms of an installment loan.
Experience shows that an official loan offers many advantages:
- low interest rates
- long loan terms
- Availability of even large loan amounts
- free use
Small difference: what is an official loan?
In everyday life, many people use the terms “official loan” and “official loan” synonymously. Strictly speaking, however, there are different financing concepts behind it.
- A civil servant loan is a free installment loan that you repay month after month with an interest premium.
- The civil servant loan, on the other hand, is a so-called maturity loan that will only be paid on a specified key date in the future. It consists on the one hand of a repayment-free loan and on the other hand of a parallel life insurance or pension insurance.
With civil servant loans, you pay your installments to the insurance company each month instead of to the bank. At the end of the loan term, the insurance company pays out the entire repayment amount in one go. You then use the money to pay the repayment-free loan. The possible terms are usually 12 to 20 years.
Tip: A civil servant loan is the right financing for medium-term purchases or for rescheduling old loans. An official loan is the right thing for long-term investments with terms of 12 to 20 years. You often need a loan as part of real estate financing, for example for building a house, buying a house or for a complex renovation.
Who can get an official loan?
Banks provide cheap loans for civil servants
- classic officials
- permanent employees in the public service
- Academics with at least 5 years of employment at a college or university
- Professional soldiers
- Retired officials under the age of 60
A restriction applies to civil servant candidates who are still in the trial period and are therefore not yet civil servants.
Good to know: Banks also differentiate between occupational risks within the occupational groups. For example, a professional soldier who oversees missions abroad is at greater risk of default than a military official, for example. The bank may then ask you to take out insurance, which will take over if the installment can no longer be paid due to illness or accident. With this residual debt insurance, the bank also covers the borrower in the event of death or possible disability.
What requirements do I have to meet in order to get an official loan?
For an official loan, you must meet the same conditions as for any normal installment loan. In addition, you must belong to one of the professional groups mentioned above and demonstrate this. A copy of the employment contract, which shows that it cannot be terminated, generally serves as proof of civil servant status. Traditional civil servants must also submit the latest change notice of their income.
The official loan also has a special feature: To get it, you first have to use it to replace all existing loans. Otherwise, the bank would not grant you financing. An exception may apply to ongoing mortgage lending, vehicle financing or car leasing contracts.
These are the requirements for the loan for civil servants:
- Legal age
- Resident in Germany
- Account with a German bank
- positive Credit Bureau entry (credit check)
- Proof of civil servant status or other permanent employment
- for the official loan: debt free
Is there a civil servant loan without a Credit Bureau exam?
No. In the case of civil servant loans and civil servant loans, the lending also depends on the creditworthiness of the borrower. The Credit Bureau score is therefore also requested from civil servants or government employees. A negative Credit Bureau information also leads to the rejection of the loan application.
Can I use the civil servant loan to reschedule?
Due to the favorable conditions, both the civil servant loan and the civil servant loan are particularly well suited for rescheduling existing loans, which usually have much more expensive interest. If you reschedule a loan, you cancel the old loan and pay off the remaining debt in one sum. The money comes from the new civil servant loan, which you then repay on more favorable terms.
However, you should read the general terms and conditions of your old loan again beforehand. Some banks agree with their borrowers a prepayment penalty, with which they can pay dearly for the loss of interest in the event of early repayment. In the event that a prepayment penalty has been agreed in your old loan, you have to weigh up whether the rescheduling is worthwhile.
Official credit: these are the advantages at a glance!
Below we summarize all the advantages that make a civil servant loan or a civil servant loan for civil servants so affordable:
- Low interest rates with guaranteed interest rates : The interest rates for the civil servant loan are significantly cheaper than with the usual installment loan. In addition, the interest rate is often guaranteed even with long terms over the entire period.
- Long terms: The option to choose a long term of up to 20 years for civil servant loans at the low interest rate grants much lower monthly installments than a normal installment loan.
- Variable loan amount: Civil servants receive higher loan amounts.
- Special repayment option: As a rule, a civil servant loan gives you the option of free special repayment and early repayment of the loan.
- Free use: As soon as there are no more open loans that you would have to replace with an official loan, you can freely decide on the use.
- Ideally suited for debt rescheduling: As a rule, the repayment of an old loan with a new official loan is a monetary solution. As a result of rescheduling, you usually benefit from much more favorable conditions
This also applies to the official loan:
- Protection of the family in the event of death: The official loan is linked to life or pension insurance, the sum insured of which serves as security for the bank and the borrower. This not only protects the bank, but also your family in the event of death or disability.
- Profit sharing from life insurance: If the benefit you receive from life insurance is higher than the loan amount from the civil servant loan due to the profit sharing, the difference will be credited to you.