Personal loans for federal government employees come in many flavors. Regardless of which account type, you are evaluating, one key factor stands out in your favor.

Your job and future earnings are far more secure compared to the average applicant! Lenders love seeing a steady, reliable income stream. This makes you eligible for larger amounts at better terms, given your other credit qualifications.

Government workers with good risk scores find unsecured personal loans easy to obtain. Those with bad credit may need to pledge collateral in order to find a willing lender, and acceptable rates and terms.

Unsecured Personal Loans for Government Employees

Federal government employees have one big advantage over private workers when attempting to qualify for unsecured personal loans. Their employer has the authority and ability to print money. This translates into a more reliable income.

Request a personal loan here. Lenders recognize your employer and can feel confident that you are less likely to lose your job because of layoffs, and other economic factors. This makes you a better risk and increases your odds of approval. Workers should also understand the implications of shutdowns and the best way to finance emergency and planned medical expenses.

Government Shutdowns

Government shutdowns may affect access to and repayment of unsecured personal loans in opposite ways. During a furlough, certain civilian employees may face a temporary interruption in earnings.

Furloughed workers may have a need to borrow money to meet everyday expenses. Historically, most furloughs end within a month, and should not affect your ability to meet eligibility standards.

During a shutdown, those with existing obligations may find it difficult to stay current on payments. The lenders expect you to make payments on time – regardless of what is happening with your employer. Set aside an emergency fund of at least one month’s payments in case of shutdowns to preserve your credit record.

Debt Consolidation

Government and USPS employees with bad credit may qualify for personal loans to consolidate debts. This is a popular way to bring temporary, immediate relief to people struggling to stay current on their bills. Once again, a steady reliable income stream is your biggest advantage.

Debt consolidation loans do not reduce what you owe but may lower your monthly payment. You accomplish this by stretching out the repayment time frames. By taking more time to return what you owe, you pay less every installment.

Debt consolidation may cost more in the end. Although you may lower your interest rate if you use the funds to pay down credit card balances, you are allowing more time for interest to accumulate. In addition, upfront origination fees raise your costs. Proceed accordingly.

Medical Emergencies

A Flexible Spending Account (FSA) is an ideal way for government employees to obtain an unsecured personal loan for medical emergencies. Your FSA must immediately reimburse qualified expenses, up to your annual election amount, regardless of what you have contributed to the account.

The same holds true for any planned elective surgeries and dental procedures that may leave you with unreimbursed expenses. Time the treatment for the beginning of your plan year, and obtain interest-free financing with guaranteed acceptance.

Interest-Free

Government employees can use your FSA for an interest-free personal loan. You repay the obligation with twenty-six bi-weekly, pre-tax payroll contributions. Pretax contributions may reduce what you pay in federal and state income taxes, plus FICA taxes.

Guaranteed Acceptance

Using your FSA provides guaranteed acceptance for personal loans. All government employees with predictable future medical and dental expenses are eligible to participate. There are no credit checks.

Personal Loans for Government Employees Bad Credit

Job and paycheck security help federal government employees with bad credit to meet the requirements for personal installment loans. You may have a poor risk score, but your future income is more reliable than private sector borrowers with similar qualifications. The same holds for postal workers with the USPS.

Many first-time borrowers benefit. Subprime lenders specialize in approving applicants with less than perfect scores and history. Your steady reliable job will be attractive to online lenders. Use the funding to consolidate debt. Stay away from payday cash advances unless you have a true emergency. Long-term installment contracts make things more affordable.

Installment Loans

Long-term installment loans help government and postal employees with bad credit improve their standing. Three important definitions can clarify how this helps your score over time.

  1. Installment loans have scheduled payments of equal amounts lasting for a specified period. This creates certainty and stability and enables workers to budget expenses more effectively.
  2. Long-term means the borrower divides the principal and interest repayment by a larger number. This results in a lower (more affordable) installment amount each month. This helps people rebuild a history of on-time payment.
  3. Personal loans are unsecured installment contracts. Adding a new account type improves the diversity of tradelines appearing on your consumer report.

Payday Cash Advances

Government and USPS employees with bad credit should utilize payday cash advances only during true emergencies such as car repairs. You should also have a plan to return the money within a short period. Take out a cash advance only as a last resort.

Payday cash advance origination fees add up very quickly if you renew or roll over the account after your next paycheck. They do not charge interest. However, the origination fees are simply another form of interest, which accumulates very quickly if you renew the account multiple times.

Allotment Loans

Allotment loans are another option for federal government employees with bad credit to get the cash they need on terms that are more favorable. With this alternative, you repay the lender directly via a payroll deduction.

  • Monthly payments are the primary drawing card for allotment loans. The money comes directly from a reliable source of funding: a payroll account. Online lenders can approve longer repayment terms when money goes to them before it goes to your bank account.
  • No credit check is another drawing card for allotment loans. Lenders evaluate credentials based on future income only. Taking money directly from a reliable payroll deduction makes it safer to approve the transaction without looking at a risk rating.

Set up the allotment by logging into your payroll system.

  • PayCenter for federal government employees
  • PostalEase for USPS postal workers

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Posted 12/7/15 9:56 PM by Kevin Haney MBA