Civil Servant Loans (Beamtenkredit): Cheaper Loans for Civil Servants

Employees and self-employed people have an edge when it comes to interest rates. The term and the loan amount aren't tied to the cost of the loan. Regardless of how risk is assessed, banks set the interest rate themselves. The lower the likelihood that a borrower won't repay the loan, the more attractive the interest rate. If everything is going well, the borrower has good creditworthiness. Banks give particular weight to pay and employment status when assessing a customer's creditworthiness.

For civil servants (Beamte) in Germany, income is determined, for example, by pay grade and length-of-service level. Healthcare coverage and retirement benefits are also regulated. A civil servant's income is more secure and predictable than an employee's. For banks, there is minimal risk that civil servants won't be able to repay a civil servant loan, because they can't be fired either. This means civil servants get cheaper loans from numerous lenders than employees and significantly cheaper ones than the self-employed. Another case is the probationary civil servant. Here it can't be predicted whether they will have a secure job for the entire term of the loan and whether their current salary will continue. Interest rates may be higher in this case.

[caption id="attachment_538" align="alignright" width="430"]Benefits of a civil servant loan Benefits[/caption]

Comparing Offers Helps You Save

Even though interest rates on a civil servant loan are lower than for other professional groups, it always pays to compare different offers. That matters for finding the right loan and saving on interest. Before you request offers, you should use a calculator to check which loan you can really afford. That also helps you work out which terms and installments fit your individual financial situation. Before you start seriously looking for a civil servant loan, it makes sense to check your Schufa score (Germany's credit bureau rating). A few incorrect entries at the credit agency can hurt your creditworthiness, and you'll get loan offers that are usually too expensive.

You can request a Schufa report once a year. That lets you find errors in your data and have them corrected. Like employees and the self-employed, civil servants can search for installment loans on comparison portals. These portals include several banks, and when offers are checked, the consumer's civil servant status is taken into account. Specialized brokers are recommended for construction loans. Portals are available for arranging loans from numerous banks. Based on the data you enter, you receive precise offers. An inquiry has no negative effect on your Schufa record. Plan your loan and explore your individual room to maneuver.