Important to official credit
- preferential terms
Lifetime, professional and temporary soldiers, white-collar workers and civil service workers, as well as full-time graduates, receive preferential terms on civil servant loans.
- The advantages of the civil service loan
Even with classic installment loans, officials benefit from higher loan sums (20-24x net salaries), longer terms and simplified application.
- Cheap debt restructuring
Take advantage of the possibility of rescheduling and give the bank a power of attorney. This makes it easy to summarize ongoing financing.
- Repayment at the official loan
It is used as a bullet loan, at the same time a capital life insurance is completed. During the term, only interest and insurance premiums are paid, which is paid by the endowment life insurance.
Much of the private finance is being requested and processed online today. The civil service loan is no exception, it exists both with and without purpose. If you are employed in the civil service by the federal government, the state or a municipality or corporation / public law institution, you fulfill the basic requirements. But are there any benefits for the borrower?
The requirements for the civil service loan
Even though the banks offer different types of loans specifically for civil servants, the basic requirements are almost identical. To be eligible for such a loan, you must be a civil servant or a probationer. The loan comparison can help to find the right loan.
In addition, full-time graduates mostly belong to this group. Also Dienstordnungs employees (DO) and employees in the public sector benefit from preferential conditions. Likewise, it includes professional soldiers.
All those status groups must have been in the public service for at least five years. But here, too, there are criteria that can lead to a rejection. This is often due to negative Private credit entries or ongoing garnishments, when it came to previous financing problems in payment.
Some banks reject applications for credit even if they have been subject to a disciplinary procedure against the employer. It is less common for open salary assignments to lead to exclusion. However, this often depends on the amount and duration of this salary assignment.
In addition, it can be difficult in those cases where you have certain pre-existing conditions and a few years to retire in between. Namely, if you decide on the variant with the bullet loan. The endowment insurance, which you must compulsorily conclude and subsequently lend, requires a health check.
Although only a few pre-existing diseases actually lead to a rejection of the loan application. But you have to expect that the regular insurance premiums will be higher. And so, overall, the cost of the loan.
Income security is your trump card
All loans that banks sell under the name “loan for civil servants” or similar are classic installment or construction loans. So they work like a conventional bank loan, with similar arrangements for special repayments or early repayment.
However, there are special things you can do to a normal employee. On the one hand, there is the relatively long repayment term, which can sometimes even exceed 10 years for installment loans.
On the other hand, many civil servant loans are structured so that you can avail them as a bullet loan. In that case, you will only receive the interest portion during the term.
After expiration, the loan is repaid in full, but not by yourself, but a parallel endowment life insurance. Because this is completed at the same time at the conclusion and serves as security for the credit. So she gets mortgaged.
If, meanwhile, you get a surplus participation, you are still entitled to it as a borrower.
Your position in the civil service will be really relevant, but then when it comes to the interest rate. Since you have a salary claim against the state, the bank assesses the default risk as low.
In practice, for example, deductions of up to 50 percent are granted on the regular interest rate. So you’re effectively paying half less than a regular employee who receives the same loan amount over the same term.
Especially in those times when interest rates are low anyway, it brings with it a big advantage. Even though official loans are mostly granted as installment loans, they are increasingly also available as construction loans. And since the loan amounts are high and the terms are long, this reduces the purchase of the house accordingly.
Alternative for spouse with the same requirements
If your spouse fulfills the same requirements and has no pre-existing conditions, this can be an alternative. Because most official loans are not earmarked and therefore available for free disposal.
Even with current financing and a bad credit rating, it makes sense to make two parallel applications and to compare the terms.
Differences between civil servant loan and civil service loan
Before you request different quotes and compare terms and conditions with the FinanceScout24 Loan Calculator, you should consider the following distinction: Civil service versus official credit.
Because the official loan is the already described variant of the bullet loan with combined life insurance. Not least, this has the advantage that your relatives are financially secure in the event of death. The insurance finally guarantees the full repayment to the bank.
The official loan, on the other hand, refers to the classic bank loan, ie in most cases an installment loan without earmarking. His name is that because of your employment and the status you simply receive cheaper credit terms. In most cases, the minimum requirements regarding income and duration of employment (as well as “dismissal protection”) are likely to be met directly.
Even as a pensioner you can benefit from the favorable conditions, because the most important basis of the minimum employment (five years) is fulfilled. Depending on loan amount and bank, the maximum amount is 20 to 24 net salaries.
In the variant of the official credit, you can easily repost existing financing. Because there is no earmarking, the money is spent at leisure.
Use the official loan comparison from FinanceScout24 to find the offers that are relevant to you. This comparison for loans for civil servants runs on the normal credit comparison page. Only with the personal details and the details of the employment your “official status” is taken over and influenced thus the credit conditions.
Gradually to the appropriate civil service loan
As already mentioned, the usual groups of civil servants are grouped together. It does not matter if you work as a police officer, judge, time-warrant or as a technical officer. Also workers and employees of corporations or institutions profit, here no differences are made on the part of the bank.
However, the only exception may be that certain banks are only active in certain federal states. But this also applies to normal employees, so has nothing to do with the normal civil service loan.
Take advantage of the comparison and make a loan request, which at FinanceScout24 is “Private credit-neutral”. Only the feature “request credit conditions” is stored, and that is only communicated to other banks within ten days.
Also, a civil service loan will only be granted if you replace all other liabilities with it and to some extent repost. Exceptions apply only to zero-percent financing, home or car loans.
Based on the loan amount, the term and the intended use, the respective offers are listed chronologically. Choose the right offer for you and come to the actual loan application.
After you have provided the most important details about yourself and have accepted a bid, you will be asked for details about the employer. Since when you are employed there, whether the employment is indefinite or if you have rented property, there will be queried.
Afterwards, please take your certificates at hand and give details of the financial situation and the income situation. Finally, they receive a written offer, have to submit supporting documents and legitimize themselves via Postident. Often, neither an employer confirmation nor the conclusion of an invalidity insurance is necessary.
Normally, the settlement of the salary, the pension or the pension notice must be submitted in the original. The bank statements, continuously and without gaps, of about three months are usually required.
In addition, all documents are typically requested for the Verbeamtung together with the certificate for employees on the non-cancellability. As already mentioned, all current loans (exceptions see above) must be replaced. For this purpose, the bank requires appropriate transfer instructions in addition to a detailed list of liabilities and real estate assets.
Differences in detail
As you can see, depending on your job status, you will need to provide evidence and supporting evidence. The bank will list its offer in detail, what is specifically required of you. Only then can the loan application be checked and finally approved.
As a rule, the processing takes up to seven working days, depending on the examination. Afterwards you will receive notification and in parallel the payment to the specified German checking account. The following section answers the most important and frequently asked questions on the topic.
questions and answers
Civil servant or installment loan, what are the differences?
Of a civil service loan is then the speech, if it is a bullet loan. During the term, you only pay the interest that accrues, and the loan is fully repaid when due. This is done by the endowment insurance, which you have to take out at the same time and which will be mortgaged. As a result, your loved ones are protected in the event of death. There is also a chance that the insurance company will receive a surplus participation. It will then be paid out when due. The amount of the insurance premium is mainly related to the health check and possible previous illnesses. If it is a prerequisite, the costs must be listed in the credit conditions.
The installment loan, on the other hand, is an unrestricted loan. They receive this due to the civil servant status on more favorable terms, often with longer terms. The same conditions apply, you only benefit from your better credit rating compared to most employees.
Why are official loans usually cheaper?
As a civil servant or civil servant you benefit from high employment protection rules, normally you can not be dismissed after the probationary period. In addition, the state as employer ensures a regular income. Use the Civil Service Loan Calculator to experiment with loan sums and maturities.
In addition, the loan repayment is secured in the form of the civil servant loan, since an endowment life insurance is borrowed. Since the risk is correspondingly low, discounts of up to 50 percent are granted on the usual interest rate. Even with the normal installment loan you profit, if there are no Private credit entries and the creditworthiness is correct, of lower interest rates.
Why do banks so often apply for public sector loans?
The advantages for the banks are obvious, because the default risk is minimal. With the civil service loan, an insurance company ensures full repayment, even in the event of death. By contrast, civil servants’ credit is comparatively high in income and the state as employer. So it would not be a problem to recover bad loans through foreclosure measures.
Unlike employees who have less protection against dismissal or the self-employed, whose income and financial situation can vary widely. In addition, since longer terms can be agreed, interest can be stretched accordingly. The bank earns well despite lower interest rates, because the default risk is low and the maturity is high.
Can I reschedule the civil service loan?
Explicitly yes, because in the fewest cases, the loan payment is bound to a specific purpose. However, it is assumed that all loans will be replaced with this civil service loan. Excluded are often lease agreements and real estate financing secured by the land register. You must list all obligations in the application and give the bank a power of attorney. It then takes over the debt restructuring practically in one step.
What happens to a civil servant in disability?
Each credit institution has corresponding supplementary agreements in the credit agreements, which make it possible to prevent invalidity for a higher insurance premium. In this case, interest and insurance premiums are paid during the term, the repayment is made on a scheduled basis by the endowment life insurance.
I am a probationary official. Can I still apply for a civil service loan?
That depends on the bank. In most cases this is possible to a limited extent. An important requirement, however, is that you have at least 25 years of age completed.
What collateral do I have to provide?
Basically, most civil servant loans do not exist without security. As with other financing, this requires proof of “adequate” security. Such collateral is provided by endowment policies or secure guarantees. The variant with the bullet loan has already been designed in such a way that all preconditions have been met with the capital life insurance loaned.
In which cases does the bank reject a civil service loan?
Although such cases are rather rare, they are of course also in this form of credit. Negative Private credit features do not necessarily lead to exclusion. But very “hard” features, such as salary garnishments and the like. The bank will reject the loan application even in the case of ongoing enforcement measures.
Again and again, refusals are reported when a disciplinary procedure has been initiated against the borrower. Rarely is the case that the credit rating is insufficient. This may be possible in lower grades or too high a debt.
What should I consider as a time soldier?
Timekeepers must note that the (remaining) period of military service plus the duration of the transitional allowance must be at least as long as the term of the loan.
Can I have further credits for civil service and academic loans?
No. One condition for granting the civil servants and academics loan is that all existing installment credits are pooled into this one. An exception to this are mortgages and leases.
What happens to the surpluses from life insurance?
The civil servant and academician loan is repaid by a life insurance. The expiry benefit of this life insurance is higher than the loan amount due to the surplus participation. This difference will be credited to you at the end of the term.
Can I deduct the monthly contributions to life insurance for tax purposes?
Monthly contributions to life insurance are generally tax deductible. However, in this case the tax policy of the Federal Government is to be monitored and, if necessary, individual questions of the tax consultants on current directives of tax law to be questioned.