One of the others may be wondering what may be hidden behind this heading: “Credit with vehicle registration”. First of all, one could assume that questions about car financing will be discussed – but this is not the case.
The loan with a vehicle letter is a customary installment loan, under which the debtor transfers his car to the lending bank as security – the vehicle letter for the vehicle in question is deposited with the bank. If repayment of the loan becomes/becomes impossible, the bank can sell the vehicle and thus get back the loan amount – or part of it. If the loan is repaid properly, the debtor will get the vehicle registration document back. A credit with a vehicle registration document is not the rule – it makes sense if the bank, after checking all the documents required for the credit, raises concerns.
Checking the requirements for credit
The deposit of the vehicle registration document as security does not affect the basic requirements that must be met when applying for a loan: legal age, a place of residence in Germany and at least 6 months of employment with an employer (or a corresponding independent activity) are in generally indispensable. In addition to evidence of regular receipt and the amount of your own income, the bank must be informed of the other obligations of the future borrower: this includes maintenance payments as well as payment by installments for existing loans.
The bank then checks whether the economic situation of the borrower is compatible with the desired loan amount (and the installments to be paid in future): whether it can, therefore, assume that the borrower will be able to pay (for the entire term of the loan!). The chances of getting a loan are therefore often much greater if you assess your own economic situation in a highly realistic manner and apply for an appropriate loan amount.
The Credit Bureau information – payment behavior and reliability
The Credit Bureau information is used for further examination and consideration – the information about the payment history of the borrower in the past and a forecast for the future (the so-called scoring) allow the bank to get a better picture of the solvency and also the reliability of the borrower. If there is negative Credit Bureau information, the bank will usually reject the loan application – if there are doubts here or there, the bank can accept the loan application, but will not offer conditions as favorable as in a complaint-free case: as soon as apparent to the bank If there is even a slight risk of not getting the loan amount back completely, they will endeavor to make their position more secure.
The credit with vehicle registration – special features
In this situation, credit with a vehicle registration certificate is often a way of making the loan possible. However, some prerequisites must also be met for this: The vehicle must have a value that makes it seem reasonable for the bank to provide security, the loan debtor must be the (sole) owner and there should be no financing purchase. Banks often require the vehicle to be fully insured for the duration of the loan – if the vehicle is damaged or even destroyed by an accident, the bank can use the vehicle insurer’s payment.