Every credit institution is happy to grant credit to police officers. In general, civil servants can safely assume low interest rates compared to employees in the private sector.
In the past it was very clear that the cheap house building loan for young police officers came from a life insurance company as a “civil servant loan”. When it came to consumer credit, lifetime officials were almost free to do without a loan comparison. B-tariff credit was the cheapest option anyway.
But times are changing. The ECB’s zero percent policy turns traditional rules upside down. Our research shows that for your financing request as a police officer, nothing is as it always was in 2016.
Credit for police officers – best credit rating
A very good credit rating for lending is made up of personal contract loyalty, the level of income and income security. When it comes to credit for police officers, all of the above requirements are interlinked. For professional reasons, police officers can be expected to be extremely loyal to the contract. Every civil servant not only fulfills a delegated task, but has to serve as a role model. Officials keep their agreements.
The level of income, although the police are underpaid in relation to their duties, allows them to make a good living. In a direct comparison to private sector security guards, policemen are paid “princely” in the higher service. At least the income is so high that every lender can assume a secure solvency. The last crucial point for assessing the personal creditworthiness of each borrower is the income security provided by the employer.
By punctual, secure and above all lifelong adequate payment, the state indirectly guarantees the loan for police officers. Neither optional termination of employment nor the risk of losing income from work due to illness endangers credit. The secure supply situation guarantees that every potential lender has the ideal conditions to minimize almost all real credit risks.
The bottom line of the credit rating is therefore almost always – best credit rating – in conclusion, low interest rates.
Changes – Police officer credit
The majority of civil servant loans in an insurance company are not annuity loans. The typical civil servant loan for building a house at a young age is granted as an end-of-term loan with an extremely long term. The insurance loan has never been able to win a direct comparison of interest rates with a mortgage loan. Nevertheless, the loan through life insurance was considered a well-thought-out, generally cheap real estate financing.
The official loan offers low monthly payments if the insurance is taken out early. Only insurance premiums and interest are payable. The lack of repayment part easily compensates for the higher interest claims. The loan due at the end of the term is repaid by the insurance benefit on the due date. At that time, not only was the originally agreed sum insured distributed.
Gains that far exceeded the guaranteed interest guaranteed additional compensation for the higher interest during the term. The financing concept works like additional pension provision with a “one-off payment”. Unfortunately, this no longer works today. The ECB’s interest rate policy robbed all insurers of their well-interest-bearing investment opportunities. Gains cannot even be expected to equal the contractual guarantee interest.
The bottom line is that the official loan for building a house is now significantly more expensive than a comparable mortgage loan. Officials do not have to worry about whether the mortgage can be approved. Their excellent credit rating makes it easier for the clerk to make a positive decision to lend and at the same time has an impact on lower interest rates.
Loan with B tariff – finance consumer requests at low interest rates
B tariff is considered “the special offer” of many banks in order to attract lump-sum reduced interest rates to credit customers with good official creditworthiness. Credit for police officers fits the target group exactly. In the past, officials were able to rely on the fact that B-tariff loans were always cheaper than loan offers for “ordinary” citizens.
The B-tariff from civil servants satisfies wishes in the same way as credit for private-sector consumers. Typical loan requests would be small loans, between 1,000 USD and 3,000 USD for purchases or a nice vacation. Medium-sized loan amounts of between USD 5,000 and USD 15,000 are also in demand for the overdraft facility or vehicle change. The only difference, officials practically always qualify for lending due to their good credit rating.
In a direct cost comparison, the good credit rating does not necessarily have a positive impact on interest rates. If a 3,000 USD loan with a B tariff were applied for at the official bank mentioned, the provider’s loan calculator shows 4.55 percent APR. Overall, the loan costs, 36 months term, amount to 210.48 USD. If a 3,000 USD loan for police officers were applied for via a free loan comparison, it would be significantly cheaper.
The loan is currently being offered at an effective annual interest rate of 1.79 percent regardless of creditworthiness. With a term of 36 months, the financing costs add up to USD 82.82 despite the “everyone’s interest”. Even with the small sum, each consumer would finance 127.66 USD cheaper than with the B tariff. With a loan of 10,000 USD, 60 months term compared to “everyone’s interest rates”, financing with a B tariff would be 277.53 USD more expensive.
Conclusion – credit for police officers
Officials are not making the best use of their good creditworthiness in traditional interest-saving models. The market has changed sustainably. The free loan comparison leads to cheap credit for police officers.