Civil Servant Loans – Special Conditions For Special Customers?

Civil servants and civil servants are considered a special group of people who enjoy a special status, especially at banks – in the form of so-called civil servant loans. But what exactly are loans to civil servants and how do they differ from conventional credit offers for the “normal consumer”?

If there is one obvious fact in the credit market, it is probably that there are groups of customers who are not too highly regarded by banks and credit institutions. These often include above all low earners and the unemployed. In addition, there are people who are burdened by negative entries in the Agency score. On the other hand, there are some groups of borrowers who are basically welcome in any bank. Long-standing existing customers with exemplary creditworthiness, for example, often receive particularly good conditions when applying for credit.

At the very top of the list of the most popular borrowers – detached from the so-called “rich” – are, however, applicants with civil servant status.

Special professional situation makes civil servants the darling of many banks

The conditions for loans to civil servants on the market are almost always characterised by the fact that they are cheaper than many other loans offered to “ottonormal consumers” from a purely interest-based point of view. In addition, however, there is also a good overall chance that civil servants and candidates for civil service status will be met with the goodwill of potential lenders in various sub-sectors.

Strictly speaking, civil servants can even hope for a certain special treatment in almost all relevant criteria by means of a detailed loan comparison. Although you should not expect massive discounts of several percent on the annual effective interest rate, you should not underestimate the chances of the loans for civil servants with regard to the overall package.

Civil servant loans – the subtle deviations are what count

For many years, the UK market offered a number of loans to civil servants that were explicitly reserved for this occupational group. However, a number of banks have increasingly opened up their credit products of this kind. The consequence was that, in addition to civil servants, at least employees in the so-called public service could hope for the favourable credit conditions. Former civil servants as well as soldiers are often among the addressees of the credit models.

However, a comparison of civil servants’ loans also shows that even in this inexpensive market environment there are certain differences. You are convinced that you have found the cheapest loan for civil servants at the first attempt? No problem. In your own interest, however, you should take a second look. It is not only the effective annual interest rates that have to be decisive.

What advantages do loans offer to civil servants?

Once you’ve found out what kind of financing you can get as a civil servant on extra fair terms, you should know what other extras civil servant loans usually offer.

As a rule, they are worth mentioning:

  • longer maximum loan terms
  • more financial leeway through higher maximum sums
  • Adjustment options during the repayment phase for civil servant loans

Many banks that offer loans to civil servants also offer interest rates that are generally granted regardless of creditworthiness, loan amounts and terms. The websites of the credit institutions and intermediary portals explain exactly how interest rates are determined and defined. When we come to the above-mentioned possibilities for retrospective changes in repayment, possible fees deserve special mention.

Because: Corrections such as a renewed increase in the loan amount, an increase or decrease in the monthly installment as well as an early repayment of the entire financing, you can make with many a civil servant loan. With many other instalment loans for normal consumers, you have to reckon with additional costs for complete repayments, special repayments or special requests such as deferrals during the term. Without doubt, exceptions here and there confirm the proverbial rule.

More capital through special status as a civil servant?

Elsewhere in the blog we have already given the important hint that you as a borrower with typical instalment loans usually reach the limits of your successful borrowing at 10-12 times the monthly net income. Rarely can you draw 15 times your monthly net income with good to very good creditworthiness. Unless you are a civil servant or have a similarly secure job. In the case of loans to civil servants, credit sums in excess of 20 times net income are quite realistic. Strictly speaking, there are even offers where you can apply for and receive more than 100,000 GBP and more. Once again, the criteria of creditworthiness and income affect the chances of success. However, tests by consumer protection agencies have repeatedly shown in the past that civil servants can apply for more money under otherwise comparable conditions.

Civil servant status continues to enjoy a good reputation. Whether the borrower in question can then show a proverbial clean slate in his or her free time sometimes seems to be of secondary importance. But this appearance is deceptive. If you take a closer look, of course civil servants must also declare existing loan agreements when applying for a loan. Each bank decides for itself what effects these burdens ultimately have. Many credit institutions no longer seem to be as generous as they used to be with officials. Rejection in the event of excessive debt levels is much more common today than it used to be.

Applying for loans with (two) civil servants?

With a little luck, you can have a particularly easy time applying for a loan with two officials. This allows you to plan very flexibly with many specialised credit institutions and make arrangements that really suit your situation and needs. If, as a “normal” professional, you can win over civil servants as guarantors or co-applicants, you, for your part, often have a good chance of obtaining fair and favourable conditions. However, guarantors in a civil service relationship in particular should of course consider this step carefully. On the one hand, under normal conditions, guarantors themselves do not have access to the funds from the financing agreement. However, you will have to pay for current liabilities if the actual recipient of the loan sum can no longer meet his obligation to pay in instalments.

Thus, for guarantees, obligations but rather no rights are emerging. Co-applicants who only give their name and creditworthiness for the conclusion of a loan should also consider this step carefully. Both borrowers are liable for defaults, regardless of who ultimately receives the money. A joint application, in turn, distributes the charges proportionally between both persons named in the contract, as agreed.

Civil servant loans as the top tier of the loan market?

In fact, the civil servant loan often deserves the status of the most favourable financing option. But remember the important point:

It is not only civil servants who can hope for approval, now that a number of products previously geared to the civil service sector have gradually been made available to other professional groups. However, there may be certain restrictions on credit lines and maturities if you have to answer in the negative to the question of civil servant status. In many places, however, borrowers still secure the often particularly low interest rates. In case of doubt, consulting the bank’s customer service department can clarify whether self-employed or normal employees also have a chance of receiving positive feedback.