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Allotment loans make it easier for federal government employees and USPS postal workers to borrow money. Lenders are more likely to approve your request when you repay them first – automatically.

Also, your job and future paycheck are far more dependable compared to the average applicant! Creditors love seeing a steady, reliable income stream and job security.

Installment loans enable civil service workers and letter carriers with bad credit history to repay the bank in equal monthly payments. Spreading payments over time make it easier to afford emergency expenses.

However, the laws in the state where you live or work could limit your choices.

Loans for Federal & USPS Employees Bad Credit

Loans for federal government and USPS employees with bad credit often feature a payroll deduction or other means of automatic repayment. Borrowers with low FICO scores and adverse payment history must compensate in some way.

Request a personal loan here. Assuring that the lender will be first in line for repayment is one way to compensate for poor history or a low score. Checking account and payroll allotments accomplish this goal. However, expect to incur higher borrowing costs to offset the added risk.

  • Higher interest rates
  • Bigger origination fees

Installment Loans

Installment loans for federal employees and postal workers are typical for bad credit borrowers. Installment contracts are close-ended. Close-ended means that the contract has a specific repayment term with fixed periodic payments.

Installment loans come in many forms, but only those with very short repayment terms fit bad credit borrowers. Short terms limit risks for lenders.

Short-term installment contracts can be an expensive way to borrow money. First, interest rates are very high. Second, origination fees boost the borrowing costs much higher – especially for people who cannot repay the entire balance on time.

Payday Loans

Payday loans are installment contracts for federal and postal employees with the worst credit qualifications. The repayment period for payday contracts is 2 weeks (Bi-weekly payroll), making them the last resort for genuine emergencies only such as car repair, medical expenses, and legal fees.

Most payday loans do not charge interest but do have origination fees. Borrowers get themselves into trouble when they roll over the obligation during the next pay cycle, and the one after that, etc. The origination fees add up quickly when you do not repay the entire balance in the 2 weeks.

Hence, regulators label payday loans as a “predatory” product. Of course, this is only true if the lender uses unfair, deceptive, or fraudulent practices. Therefore, read your contract carefully.

Payroll Allotment Employee Loans

Payroll allotment loans for federal government and USPS employees put repayment on autopilot. Lenders are more willing to approve applicants when the funds come out of an account mechanically. The money goes to the bank before hitting your wallet – where anything can happen.

Request a personal loan here. The lenders in this channel rely on an auto debit from your checking account rather than a payroll allotment. Using a checking account gives you access to a much more extensive network of companies who might approve your request.

No Credit Check

Allotment loans for federal and USPS employees rarely have no credit check. Supposed no credit check lenders appeal to sub-prime borrowers who cannot win approval from upscale finance companies or banks.

Expect the lender to use alternate sources and focus on income and affordability instead of a credit check.

  1. Alternate Sources: The company may pull a consumer report from a non-traditional source (not Experian, Equifax, or TransUnion) or use an alternative score (not FICO or Vantage) to evaluate your request.
  2. Income & Affordability: The company may look at your monthly earnings relative to your monthly debt service obligations to verify that you can afford the periodic payment.

The automatic deduction from your paycheck makes banks comfortable approving applicants without a traditional credit check. Think of it as an important tiebreaker if you have an adverse payment history.

Payroll Deduction

Federal government employees and postal workers can take advantage of three types of allotment loans through an automatic deduction. Choose carefully as each option has different pros and cons. Read the terms and conditions carefully before hitting an online submit button.

  • Discretionary payroll allotments allow you to start, stop, or adjust the automatic payment at any time. People commonly make rent and other periodic payments using this method.
  • Non-Discretionary payroll allotments cannot be stopped or changed once started. People typically make child and spousal support and other court-ordered payments this way.
  • Bank account allotments take money directly from a checking account funded by auto deposit. A more extensive range of lenders supports this method – boosting your options.

Government Employees

Federal government employees can access allotment loans on the most favorable terms on average (interest rates, origination fees, and use of discretionary deductions). Your future earnings and job security are far better when compared to the typical borrower.

  • Future earnings are stable because the government can print money and rarely lays off workers when economic conditions falter
  • Job security is top-notch because federal workplace rules make it very difficult to fire personnel for poor performance

Banks love a steady income and a secure job. Log into your PayCenter to set up the allotment or arrange for an automatic deduction from your checking account.

USPS Postal Employees

USPS postal employees can also access allotment loans but on less favorable terms on average (interest rates, origination fees, and non-discretionary deductions). Postal service workers enjoy fewer earnings and job security in comparison.

  • USPS has been losing money for years and is shrinking its workforce as a result. Layoffs have become more common as the market shifts to other delivery methods.
  • Letter carriers and package handlers perform tasks that lead to accidents and injuries. Lost income during a temporary disability makes it challenging to stay current on bills.

Lenders are more cautious about approving postal applicants for these reasons. Keep these factors in mind when setting up the allotment via PostalEase or on your checking account.

State Regulations

Payroll allotment loans for federal and postal employees are more difficult to obtain in some regions. Many states place legal restrictions on small-dollar lending, while other states allow consumers to choose for themselves. For example, contrast the rules and availability in Georgia versus Texas.

Georgia

Allotment loans for federal employees and USPS workers are very scarce in Georgia. Georgia has two restrictive laws designed to protect consumers from “predatory” small dollar lending practices. However, the regulations also strangle access.

  1. The Georgia Industrial Loan Act makes it illegal to lend $3,000 or less unless the company meets certain exceptions
  2. The Georgia Payday Lending Act of 2004 (“Georgia Act”) makes it a crime for lenders to violate the state usury limits

Georgia is the home for 72,000 civilian workers employed at the departments of the Air Force, Army, and Veteran’s Affairs, plus the Centers for Disease Control and Prevention, and others. Because of these laws, only those with top-notch credit qualifications will be meet the underwriting criteria.

Texas

Allotment loans for federal employees and postal workers are far more abundant in Texas. In contrast, Texas regulators take a “hands-off” approach and place fewer legal restrictions on small dollar installment lenders.

Texas is the home to over 2 million civilians working at the departments of Veteran’s Affairs, Army, Navy, Airforce, Defense, Agriculture, the Internal Revenue Service, and many others. Applicants should do their homework and read the terms and conditions before setting up a payroll deduction.

Sources:

  1. Georgia Laws
  2. Texas Laws
  3. Number of Workers
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