A credit card with a vehicle registration document is usually taken out when the associated vehicle is financed. However, it is also possible to deposit a vehicle registration document for other loans as collateral.
However, this step should always be well thought out.
Credit with a car letter as security – short info
- Young ready-to-use vehicles represent a significant asset
- Credit with the car letter as security is available for purchase and also with free use
- Compare – at a glance current loans from the network
- Apply – at first without obligation – your vehicle loan at low interest online
Why credit with vehicle registration?
The vehicle registration document is always considered as collateral when borrowing. If a vehicle is purchased and financed, the bank reserves the right to retain the vehicle registration document as a pledge.
Credit with vehicle registration – freely usable – fast grant – interest advantages
The vehicle has the value needed to secure the loan. In addition, the value decreases in parallel to the loan amount.
The risk of a loan default is reduced and the bank can make a good loan offer. However, a letter of credit is only required if it is a purpose-specific loan.
Loans that are taken out as simple installment loans and without earmarking do not automatically require the vehicle registration as collateral. Because for loans without purpose, the bank does not know that a car is financed.
This is only known if the loan is taken directly from the dealer or if the bank provides a special car loan.
Credit with vehicle registration – the advantages
A credit with a vehicle registration brings various advantages. Since the vehicle can be taken as collateral, the borrower does not have to seek additional collateral.
Not even if the financing is accompanied by a large loan amount. Only the Credit Bureau and the income must then still vote.
A second borrower or other material as well as financial collateral is not necessary. The good coverage makes it possible for the banks to make a good loan offer.
The interest is low and the repayment can be arranged individually. Often, payment pauses or early redemption are possible.
Credit with vehicle registration – the disadvantage
There is a major disadvantage associated with a credit with a vehicle registration. The vehicle can not be sold during the period of financing.
Because without a complete vehicle registration, the car can not be sold. The banks therefore keep the vehicle registration document in order to ensure that the security is not lost during the repayment term.
Other significant disadvantages are not known in such a loan offer. Because all other aspects prove to be an advantage and therefore should be evaluated accordingly.
How can the loan be taken up?
As a borrower, you have the choice of taking the loan directly from a car dealership or rather from a free bank. Both variants offer advantages and disadvantages.
With a loan with vehicle letter from the dealership eliminates a longer search. In addition, many car dealerships attract with particularly attractive offers.
But beware: Balloon financing and the like only look good at first glance. Because in the end, there is always a big guess waiting to be made somehow.
For a car loan through a free bank, a comparison should be made. But that can be worthwhile.
Although the interest rates are usually higher than the dealership. No balloon funding is required.
In addition, one can appear by the credit at the dealership as a cash payer. This usually brings a generous cash discount, which can amount to several thousand euros.
A saving that is clearly noticeable and a clear advantage.
How should it be done?
It is advisable to obtain a loan offer from the dealership and from a free bank. So it can be seen exactly, which advantages and disadvantages can be found.
The offer should then get the offer, which can be best integrated into the life of the borrower.