The car loan is a consumer loan that is used to finance a car. It has a discount rate compared to a non-earmarked loan. When taking out a car loan, the vehicle buyer usually deposits the registration certificate Part II of the vehicle, colloquially known as the Kfz letter. Criticism at http://e-agdrtv.net/online-only-title-loans-browse-now-and-then-request-an-online-title-loan/
A car loan can be taken out through the vehicle dealer through an auto bank or at an independent commercial bank. Borrowing from a commercial bank enables the driver to act as a cash payer at the vehicle dealer and to agree a correspondingly high discount on the vehicle price. Commercial banks offer car loans for new cars and sometimes with restrictions regarding the age of vehicles for used cars.
The waiver of the deposit of the vehicle letter and its effects
The fact that a car loan is granted without a vehicle letter deposit is an exception. This is used for lending by some direct banks and simplifies the handling of the loan at the bank. In the case of conventional car loans, this is obliged to securely store the vehicle letters deposited with it, which results in costs. With regard to the assignment of the vehicle as credit security, nothing changes with a car loan without a vehicle letter.
The vehicle buyer and the bank agree in the loan agreement that the vehicle serves as security for the loan, and the registered vehicle letter additionally secures the agreed assignment. The sale of the financed car without the consent of the bank is technically possible for a car loan without a vehicle letter deposit, but is not permitted due to the loan agreement. If the car buyer sells the car on a car loan without depositing the registration certificate, he is violating the credit agreement and can even be prosecuted in the event of improper credit service and garnishment that is unsuccessful due to the car being sold in the meantime.
If car buyers do not want ownership rights to the car that are restricted until the loan is repaid, they can take out a consumer loan without a specific purpose. Such a loan can be used for any purpose and therefore also for the purchase of a vehicle, but is associated with higher interest rates than a dedicated car loan.
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Some car buyers find the filing of the registration certificate unpleasant and deliberately look for a car loan without submitting a vehicle letter to the financing bank. For them, the waiver of the Kfz letter reduces the cost of a loan, on the other hand, the risk of loan default increases, especially since not all car buyers are aware of the vehicle’s security transfer, which nevertheless exists and is agreed in the loan agreement.
The requirement for the borrower to take out fully comprehensive insurance for the new car also remains in most cases despite the car loan being issued without a vehicle registration certificate. It is also in the interest of the car buyer, since without the appropriate insurance cover after an accident he is responsible for, he may have to continue to pay off the loan for a car that is no longer usable. In principle, it should be unimportant for the borrower whether or not he has to deposit the vehicle registration certificate for a commercial bank.
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