Civil servants, as well as civil servants, have a reputation for above-average reliability. At the same time, they have a much safer job than private-sector workers because layoffs for operational reasons are not common in the public sector. In addition to jobs at the federal, state and local government levels, the public service also includes jobs in public law foundations and radio stations.
Social security and municipal savings banks are also part of the public service. Private companies such as municipal utilities do not actually belong to the public service but are partly treated as equal by lenders as community-owned companies. There is no longer a legal difference between employees and workers, both in the private sector and in the public service, so that the term employee describes all employees working there.
The civil servant loan for civil servants
The civil servant loan is the cheapest loan for civil servants. Contrary to its name, this is not only intended for civil servants but is also paid by almost all financial institutions to public servants. The reason for the reduced interest rates on a loan for civil servants and for civil servants is that this group of people is considered to be particularly reliable and the credit institution experiences significantly fewer defaults than with loans to other consumers.
Loans for employees in the public service are granted as consumer loans without a purpose and without specifying the intended use, as well as construction loans and car loans. In the case of a special-purpose loan for public servants, the borrower additionally reduces the interest rate, which is already favorable, since the corresponding loans are secured separately by the entry in the land register or by handing over the registration certificate (Part II) of the vehicle.
The price comparison remains necessary
Even if the loan for civil servants is given cheaply as a civil servant loan, a careful cost comparison remains essential. It cannot be ruled out that the civil servant loan of a financial institution, which is cheaper than standard loans, has a higher interest rate than the standard offer of another bank. The price differences for official loans are no less than the differences between different banks for non-discounted consumer loans.
The effective annual interest rate including all additional costs is decisive for the valuation of the credit costs. In some exceptional cases, it is also sensible for public servants to accept generally accessible offers for financing. This is especially true when agreeing to pay in installments with mail-order companies or larger stores, for which an extremely low-interest rate or even the exemption from interest is regularly offered. Other conditions also differ significantly for official loans for civil servants, depending on the lender.
The main differences are in the possibility of free additional repayments, which are particularly important for large loans such as real estate loans. Due to their high level of responsibility, public servants make sure that they can pay the agreed repayment rates when choosing the loan term and if in doubt, prefer to choose a longer-term and correspondingly low rate.