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Loan with vehicle registration

The vehicle registration document serves as proof of the registration of a motor vehicle for use on public roads. It contains information about the vehicle identification number, the license plate associated with the owner and the general type approval. The details of the owner in the vehicle registration actually refer to the public responsibility for the respective vehicle, so that a transfer of ownership would be possible without handing over the document. However, the case law confirmed by the Federal Court of Justice states that the good faith acquisition of a motor vehicle is only possible if the buyer also receives the vehicle registration document. Thus, the vehicle registration is due to the consistent case law as confirmation of a security transfer, the effectiveness of which already occurs by the corresponding clause in the purchase contract.

The deposit of the vehicle registration document is possible, since its entrainment is not prescribed during the journey. The storage of the vehicle letter in the car is insurance even considered negligence, as it allows the sale of the car after a theft. The vehicle registration document is also referred to as a vehicle registration document, vehicle registration card or type certificate. The official name since 2005 is the registration certificate Part II, while the vehicle registration document to be carried on each trip is referred to as a Part I registration certificate. In colloquial language, the official name has barely prevailed, so that continues to be spoken mainly by the vehicle registration. This even applies to clauses in car loan agreements. A vehicle registration document can be taken in two different ways.

The car loan with deposit of the vehicle letter

The car loan with deposit of the vehicle letter

The typical loan with vehicle registration is the financing of the car purchase. The credit agreement usually includes not only a vehicle security transfer clause until full repayment of the loan, but also the agreement that the Part II registration certificate must be deposited with the bank by that date. In this way, the financial institution ensures that the borrower does not sell the vehicle without his express permission. Since the credit for a vehicle purchase with a vehicle registration certificate, as opposed to traditional consumer credit, is secured by the transfer of ownership and thus by the financed object, significantly lower interest rates than with ordinary loans are possible.

Autobank banks offer the cheapest interest rates on a mortgage backed loan, often encouraging the sale of previously low sales models through further interest rebates. However, the buyer can only negotiate a notable discount if he receives the credit with a vehicle registration document from an independent commercial bank and therefore counts as a cash payer in the dealership. The car loan can be arranged with and without down payment, the latter can also be made by selling the old vehicle to the dealer. Also possible is the partial loan financing of the car and the agreement to pay a final installment. An increasingly popular form of vehicle-lending credit is three-way financing. It combines the benefits of debt financing with those of a leasing contract and, in addition to paying or refinancing the final installment, allows the buyer to return the car to the contract end.

The vehicle letter loan as a variant of the mortgage loan

The vehicle letter loan as a variant of the mortgage loan

The use of an already fully paid own car as a pledge is possible if the pawnbroker has enough space. However, it has the disadvantage that the car is not available before the deposit release. New offers for a credit with a vehicle registration allow the use of a paid-off car as a pledge and at the same time its further use by the owner. At the same time they are significantly cheaper than traditional loaner’s loans for a car. Actually, only a few online financial institutions offer the credit with a vehicle registration document; in addition, when borrowing, the vehicle owner can ask whether the security transfer of his vehicle leads to a credit enhancement and thus to reduced interest rates.

The loan with security transfer of the paid-off vehicle is issued without earmarking. When calculating the possible amount of credit, the institution assumes the resale value, although the Schwacke list is generally accepted as correct, even if these are not legally binding values. If the vehicle is not covered by a fully comprehensive insurance, the holder must take out such a cover so that the collateral remains not only after a possible theft of the car but also after an accident caused by the borrower. As with the financing of a car purchase, the lender may use the car, if the customer does not repay the installment for a loan with a vehicle registration without earmarking as agreed and does not respond to reminders. Since banks are primarily interested in repaying the loan and not in the realization of the car, they usually agree to change the repayment plan if the borrower requests it on time, or at least after receiving a first reminder.

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