A loan for civil servants has lower interest rates than an average loan because almost all lenders extend the civil servant loan to borrowers who are otherwise employed in public administration.
What is an official loan?
A civil servant loan is a loan that is granted to civil servants and other authorized persons at reduced interest rates. To which group of people a discounted loan is granted, of course, each lender decides for himself. Most grant cheap loans for civil servants in addition to civil servants, some banks extend the range of low-priced credit customers to almost all employees who have been with theirs for several years Current employers are employed. The administration of cities and municipalities as well as the federal states and the state are considered to be public services;
Activities in hospitals are assigned to the public service if they are performed in a city or state hospital or in a university clinic; in the case of church sponsors, whether the sponsor is directly the official church or an organization subordinate to it, such as Catholic Caritas or the Evangelical Diakonisches Werk, or a private law organization set up under the umbrella of the church, decides whether the employment relationship is to be recognized under public law. Working for other public law organizations such as the state broadcasters or the Stiftung Warentest is also considered employment in the public service.
Why do public sector workers get discounted loans?
Lenders can provide loans to public sector employees on favorable terms, as jobs with public sector employers are considered to be above average security. While civil servants are not as extensive as civil servants are protected against dismissal by the employer, termination of the employment relationship for operational reasons is largely ruled out. This job security improves the creditworthiness of credit applicants with employment in the public service, so that lenders grant them particularly favorable conditions. In addition to reduced loan interest rates, the discounted loan terms also include higher loan amounts and longer terms.
Processing of lending
Loans for civil servants are granted by both publicly employed and civil servant banks and general commercial banks. Since the employer must always be specified in the loan application, potential lenders always know that their credit customer is one of the employees in the public service. Nevertheless, it is advisable to explicitly request a loan for a civil servant, since otherwise the largely automated processing of applications can lead to the borrower receiving a loan without favorable conditions. A loan comparison to find the cheapest offer is also essential for a loan for civil servants.