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Credit for civil servants employees.

 Public Service Loan Specialist

Public Service Loan Specialist

Banks and savings banks are happy to lend to public servants and civil servants. Supported by the loyalty of the public employer, the credit risk is considered to be extremely low. – Because, payment difficulties rarely lead to uninhibited consumption, but often unemployment and late payment. In recent years, the low level of income among average non-public sector employers has increased.

For decades, the high level of repayment reliability and the low credit risk were rewarded with special interest for the public sector. Even today, special loan agreements for employees of public service providers are still in the drawers of the house banks. In addition, special banks geared towards the public service are active on the net.

Special offers fight for survival – insurance loans

Special offers fight for survival - insurance loans

Overall, the interest rate level has dropped dramatically as a result of the LCB’s measures. The colliery is not just paying small savers, whose savings book does not even offset real inflation. (The real loss of purchasing power, not the inflation constructed by LCB). Life insurance policies are particularly affected by the loss of interest. The situation was so delicate that, in cooperation with the legislature, the originally agreed guarantee interest of old contracts was overridden.

This breaks down an important pillar of financing for loans for public servants, through life insurance. Interest rates alone have always been a bit higher. The civil servant loan was favored by the surplus shares that were ultimately distributed to the borrower. Without surplus shares – it does not look like real surpluses for life insurance in the future – the loan does not pay off.

But, not only insurance companies are specifically looking for public sector borrowers. Credit institutions such as the “Allgemeine Beamten Bank” can be found online, which even carry the desired clientele in their names. A small loan comparison with “interest rate for everyone” shows that the special loan for the civil service offers the cheapest financing.

Credit comparison – credit for everyone against special offer

Credit comparison - credit for everyone against special offer

Funding requests from all strata of the population and income groups are not in the five-digit range. The most common installment loan is the small loan. The demand is so great that most credit institutions had to automate the credit check process in order to meet the demand promptly. Credit is used for public sector employees as a small loan to offset the overdraft facility and to buy popular consumer goods.

A typical financing amount is between 1,000 USD and 3,000 USD small loan. Borrowers would like to pay back in small installments. With this financing size, 24 or 36 months of term fit into the household budget. The loan calculator for the FlexoPlus installment loan from Allgemeine Beamten Bank calculates over 3,000 USD for a small loan, term 36 months, 4.55 percent effective interest. Overall, the bank’s credit calculator shows the financing costs at USD 210.48.

The leap into the loan comparison shows that loan – with the same amount and the same term – is offered for an effective annual interest rate of 1.99 percent. Whether the loan is applied for by officials, public servants or an employee of XY does not matter when it comes to interest. With this variant, the loan costs a total of 92.08 USD in financing costs.

The small comparison shows quite clearly that special providers can easily be undercut in the loan comparison. In the example, 118.40 USD would be saved. Or in other words. – Loan financing costs for public servants could be cut by more than half if no specialist provider finances.

Negative private credit checker

Negative private credit checker

Problems with the private credit checker are rare for public servants. – But the effects of a negative private credit checker are the same for all borrowers. Regular bank credit is effectively excluded in the case of poor private credit checker. Loan for public sector employees with negative private credit checker could come from a credit institution specializing in risk loans or from private sources.

Trying a loan from a risk financier is only worthwhile if there are no other risks besides the hopefully completed entry. The credit check by hand must prove that a loan can only fail because of the negative private credit checker. If it fails due to proof of real solvency or through the entry in the list of debtors, there are no loan opportunities.

The same applies to loans for employees in the public service with bad private credit checker from private. Belief in the good payment behavior of the employer alone is not enough to create sufficient trust in the loan approval.

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