Public sector employees enjoy a higher reputation at credit institutions than employees in the private industry. The reason lies in the above-average job security. Public sector workers are mostly salaried employees and wage earners, while civil servants, judges and soldiers each form their own categories. Employees and civil servants as well as judges and soldiers are largely equal in terms of access to discounted loans for public servants.
The cheap official loan
Not only civil servants receive civil servant loans, they are also given as cheap loans for public servants. As a public service, all banks have offices in municipalities, in the federal states and in the state, as well as in state-controlled public service providers such as broadcasters. Local authority operations are not considered to be a public service in the proper sense, but many banks grant their employees access to official loans.
Banks offer cheap loans to public sector employees, as their jobs are traditionally considered to be particularly secure. In fact, for operational reasons, layoffs are extremely rare for employees in the public service, even if they are permitted in contrast to the civil service law. Instead, employees in the public service are entrusted with other activities if their previous area of responsibility ceases to exist. Thanks to the extensive security of the job, the credit default risk is reduced.
In addition, improperly serviced debts of public servants continue to be considered a flaw, so that borrowers pay much more attention to the agreed repayment of their loans than other customers.
Temporary public employment and loans
While a fixed-term contract of employment for employees in the private sector means the end of credit approval for most lenders, banks are more likely to face a limitation for public sector employees. For most banks, it goes without saying that cheap loans for public sector employees are also given on a fixed-term contract if the loan repayment takes place within the time limit. Many of them also grant the cheap civil servant loan for a longer repayment period and assume that that the time limit continues as usual in a further employment relationship.
Academic staff at universities often conclude employment contracts with long-term contracts. In the scientific field, this is permitted and reasonable if the time limit is justified, if the position serves to prepare a doctorate or to participate in a temporary research project.
Even if the bank offers cheap loans for employees in the public sector despite the limited time of the job, borrowers should, in their own interest, pay attention to a maximum term of the loan contract until the end of their current employment contract, because there is no longer a guarantee for the extension today.