Payroll Allotment & Installment Loans for Federal Employees

Federal government employees have multiple ways to borrow money to help with emergency expenses or accelerate meaningful purchases.

Installment contracts such as personal loans and auto financing feature uniform monthly payments over a pre-defined period and appeal to people with reasonable borrowing credentials because the terms are often more affordable.

Payroll allotment loans are also installment contracts and appeal to individuals with bad credit histories. These lenders often approve applicants without pulling a copy of their consumer report or considering their low FICO score.

Creditors love the steady, reliable income streams and job security of federal employees: the only government employer with the ability to print money!

(Sponsored Link)

Payroll Allotment Loans for Federal Employees

Payroll allotment loans for federal government employees put repayment on autopilot. Lenders are more willing to approve applicants with weak borrowing credentials when a trustworthy third party regularly deposits money into an account.

The lender deducts funds directly from your payroll account every two weeks to repay the obligation – before you have a chance to spend it elsewhere.

No Credit Check

Federal government employees can often get payroll allotment loans without a credit check. When making underwriting decisions, these lenders forgo using traditional FICO scores calculated from Equifax, Experian, or TransUnion data.

Instead, they rely on alternative ways to minimize default risk without a credit check from conventional sources.

  • Base loan eligibility on income rather than credit score: the allotment amount deducted is sufficient to cover the bi-weekly payment
  • Tap into non-traditional bureaus that provide public record data (bankruptcies, judgments, liens, etc.) and other payment history information
  • Auto-drafting payroll via allotment minimizes the risk of future delinquency
    • 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

Bad Credit

Federal government employees with bad credit history and low FICO scores frequently find that payroll allotment loans are a viable way to win approval.

Mainstream lenders shy away from people with adverse payment history on their consumer reports and frequently decline these applications. You need to overcome insufficient borrowing qualifications somehow.

Federal employees with bad credit records have two opportunities to provide lenders an extra reason to say yes instead of no.

  1. Automatic repayment via payroll deduction reduces default risks
  2. Your agency can provide electronic employment and income verification

Like BMG Money

Many federal government employees search for payroll allotment loans like BMG Money because they do not meet the qualifications, live outside their service area, or they want to shop around for more affordable terms (interest rates and origination fees).  

Scroll down to the payday and installment loan sections for alternatives.

BMG Money is the leading lender in this space, but they cannot approve every applicant. You might fall into this category for several reasons.

  • Employed by the federal government for less than one year
  • Currently in bankruptcy
  • Under 18 years of age
  • Active in the military
  • Work for an agency that does not participate in the program
    • 450 on their approved list
    • 633 agencies total per usa.gov

BMG Money is not licensed to operate in every state, and many federal employees live in these regions. For example, people who live in northern Virginia and commute to Washington DC do not qualify. Others live in ten more states (New York, North Carolina, and eight others).

BMG Money is a subprime lender, meaning they might charge more (origination fees and interest rates) or offer shorter repayment terms because they do not perform a credit check. Therefore, people with good borrowing qualifications could find better deals elsewhere.  

Payday Loans

Payday loans for federal government employees are similar to payroll allotment arrangements in many respects. However, they include key differences that make them an inferior alternative.

PaydayAllotment
Interest chargesNoYes
Origination feesYesYes
Repayment terms2 to 4 weeks6 to 36 months
Rollover optionYesNo
Draft from paycheckYesYes
No credit checkYesYes
Bad credit OKYesYes

Most payday loans do not charge interest but do have hefty origination fees. Borrowers get 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 a short period.

Therefore, payday loans make sense only when allotment arrangements are not an option to fund emergencies such as car repair, medical expenses, or legal fees.

  • Newly employed at a federal job
  • Currently in bankruptcy
  • Working at a non-participating agency
  • Living in a non-licensed state that allows cash advances
    • Virginia
    • Wisconsin
    • Nevada
    • Indiana

Installment Loans for Federal Employees

Federal government employees with good or excellent borrowing credentials often find that other installment loans are viable alternatives. The lenders in this category often perform credit checks and consider FICO scores, which enables them to offer terms that could be more affordable in many cases.

  • Longer repayment timeframes
  • Lower borrowing costs
    • Interest rates
    • Origination fees

Instead of setting up a payroll allotment, you establish direct debit from your checking account to enable automatic repayment in equal monthly installments for personal loans and auto financing.

Personal Loans

Personal loans for federal government employees are installment contracts that rely on your signature promise to repay the obligation according to terms. In other words, the arrangement is unsecured; you do not have to pledge collateral.

Request a personal loan here. (Sponsored Link) If approved, the lender will deposit the funding into your checking account. Repay the lender in equal monthly installments by allowing auto drafting to avoid late charges and delinquencies.

In the event of default on a personal loan, the lender has nothing to repossess because the installment contract is unsecured. The company would need to file a lawsuit and obtain a judgment to garnish wages or place a lien against your property.

Auto Loans

Auto loans for federal government employees are installment contracts that use the equity in your vehicle as collateral. The lender relies on the legal right to repossess your car after default to minimize losses – instead of a signature promise to pay.

Request an auto loan here. (Sponsored Link) If approved, the finance company will send the funding to the dealer so that you can purchase the car and drive it home. Repay the lender in equal monthly installments drafted directly from your checking account.  

Auto title loans are another form of secured installment contract that federal employees can utilize for emergency needs. However, you need to possess a clear title (owe nothing to another car finance company) to take advantage.