Loans for civil servants are happy to be given. Special conditions can be expected for the credit with the best credit rating from the right employer. Classically cheap financing would be the official loan from an insurance company and the B-tariff loan from a bank.
But do the old rules still apply in times of the Capital Lender’s zero interest rate policy? We got to the bottom of the question with a loan comparison.
Loans for civil servants – guaranteed interest rates are part of the job
Loans for civil servants have always combined favorable interest rates and long terms. With small, affordable installments, the official loan from an insurance company was previously the guarantor of low-interest house construction. But not only insurers, but also credit institutions symbolically roll out the red carpet for officials.
B-tariff officials secured annuity loans on terms that workers of equivalent career levels in the private sector could only dream of. Credit comparisons have been a waste of time for civil servants in the past. Long-term credit came from the life insurance of the annuity loan from the house bank or the special provider from the Internet. Everything else was definitely more expensive.
A neutral credit comparison can prove whether the old wisdom still applies today (2016). We took a close look at loans for end-of-term civil servants and the annuity loan of the general civil servants bank.
Civil servant loan as a term loan – still interesting?
Low key interest rates are not a blessing for large investors. Just as the small saver is cheated by the Capital Lender’s policy about his modest interest income, so do the big investors. From the insurer’s point of view, the key interest rate exerts double pressure on the civil servant’s loan as an end-time loan. An interest rate level that would bear one’s own costs can hardly be achieved on the market.
Nevertheless, the loan offers for civil servant loans are relatively expensive compared to the mortgage loan or Best Bank loan. It used to be that the borrower could easily compensate for the additional costs. He did not pay any repayments, only interest and insurance contributions. At the end of the term, the loan was repaid by the sum insured.
The borrower received compensation for the previously higher interest rates through the profit sharing. The bottom line was that loans to civil servants from the insurance company were inexpensive, despite initially rising interest rates. Today, life insurers are not even able to keep their originally guaranteed interest rate promises. Without the intervention of the legislator, who subsequently rescheduled the guaranteed interest rates, the industry would have been in an imbalance.
Today, the bottom line for civil servants’ credit is no longer expected to be that the participation in profits relativizes the high interest claims when they fall due. Even without a calculator, this financing is hardly worthwhile today.
Credit comparison – civil servant bank versus direct bank
The loan comparison starts with Germany’s most popular loan – the small loan. Whether for car repairs, home cinema or for overdraft facility, 1,000 USD to 3,000 USD credit fit practically every purpose. Small loans are usually financed with a term of 12 months to a maximum of 36 months. The Cream Bank installment loan is used for our loan comparison.
If a loan of 3,000 USD, 36 months, were financed by the civil servant bank without a B tariff, the offer would be 4.75 percent effective annual interest. Monthly payments of $ 89.44 would have to be made. The installment calculator shows credit costs at $ 219.84. With the B tariff, the effective interest pa drops to 4.46 percent. Monthly payments of $ 89.18 would have to be made. The rate calculator shows the total interest costs at 210.48 USD.
In the free loan comparison, the same financing would be possible at the effective annual interest rate of 1.79 percent regardless of creditworthiness. The monthly installment payment for this offer is $ 85.63. A total of 82.82 USD in financing costs for the small loan would have to be borne. It is therefore certain that the special loan does not pay off for small loans. Even without a civil servant bonus, interest of $ 127.66 could be saved.
Credit comparison 20,000 USD – “B tariff” versus “normal consumer loan”
Loans for civil servants in higher positions are usually granted at the best interest rate depending on the credit rating. At least with a larger loan amount (20,000 USD) and a long term, for the comparison 84 months, the special loan should score. Without the B tariff, the civil servant bank’s credit calculator shows 5.15 percent APR for the desired loan.
The ABK rate calculator offers 20,000 USD for free use, 84 months term and B tariff at 4.95 percent effective interest. Monthly payments of 281.19 USD would have to be made. The loan program calculates interest of $ 3,619.96 as the cost of the entire financing.
In the free credit comparison, loans for civil servants with the best credit rating (20,000 USD – 84 months term) could be financed from 1.89 percent APR. With interest rates independent of creditworthiness for everyone, 3.59 percent APR would be the cheapest interest offer. Installments would have to be paid in monthly installments of $ 269.09. The total financing costs 2,603.64 USD interest.
Conclusion: loans for civil servants in a credit comparison
Regardless of whether for small loan amounts or long-term financing. The good creditworthiness of an official is no longer expressed in particularly low interest rates for the B tariff.
In the case of small loans, loans to civil servants from the civil servants’ bank were more than twice as expensive. For the larger loan, the specialist provider asked 1.4 times the interest on the “Otto normal consumer loan”.