A loan for teachers cannot be taken out by every borrower. This loan is only granted if the applicant actually works as a teacher or works as a volunteer. This makes it easy for people to get a loan if their job is secure and their income is very high.
This is the case with teachers, because they are civil servants and are therefore almost non-cancellable. The loan amount has to be repaid within twelve to 20 years, which is a very long time. An employee cannot know whether he will still be in the same job in ten years or may have lost his job. Banks are aware of this risk and reject a credit teacher for this group of people.
When does the loan make sense?
The loan for teachers only makes sense if it is a large loan amount. The monthly rates are quite low so that they can be dealt with without any problems. Consumers who want to have a house or car financed, for example, can benefit from the low interest rates and the long term. For borrowers who have a secure job, ten or 20 years are unimportant.
You can be sure that they will continue to do their job, thus giving the bank security. Teachers can make larger purchases with no problems with the loan. It also makes sense if debt restructuring is to be carried out. Since a teacher has to repay all of the legacies of the loan, he can save a lot of money with low interest rates. Old loans often have higher interest rates, which then no longer have to be paid.
Conditions of the bank
As this loan is becoming increasingly popular for long-term teachers, there are numerous offers. These should be compared with each other, because the bank generally pays low interest rates, but has other conditions that must be met. Some banks require that you take out residual debt insurance. This is unsuitable for civil servants because they very rarely lose their jobs.
A life insurance policy makes sense for both sides. This ensures that the bank receives its money and the borrower secures the loan, himself and his family. If the borrower dies, the family does not have to repay the loan, which is then covered by the insurance. In addition, the borrower only has to pay the insurance premiums. The installments remain dormant and are paid with the contributions at the end of the term.