Taking out a loan is nothing special today, on the contrary. From the washing machine to the car, from the stereo system to the journey: many necessities, but also conveniences of daily life become possible only through financing, or a loan (also called installment loan) – all of which is legally based on a loan agreement. The loan with a car letter has a peculiarity / an additional legal agreement, which makes it sensible to look at the legal basis – the loan contract as such – first of all:
Credit with a car letter – the basis is always a loan agreement
The loan agreement is a so-called mutual contract in which the lender (the bank) agrees to pay the loan amount (the loan amount). The Borrower (borrower) agrees to repay the loan in installments (installments) plus the agreed interest until a certain date. What sounds – theoretically and in words – as if “nothing could come in the way”, is often very different in life. For while the bank performs its service at the beginning and at the same time, years can pass before it receives the return of the Borrower has received back in full.
And a lot can happen during this time – if the loan debtor becomes unemployed, or ill, or other circumstances prevent him from regularly completing his payments, the bank will fail. To minimize this risk, banks often set high standards when assessing credit requirements.
Loan with a car letter – requirements and test methods of the banks
In addition to the formal requirements for a loan (of age, residency in Germany, at least six months, unfinished employment relationship), it is of decisive importance for the credit institutions whether and to what extent the income of the future debtor is sufficient to meet its regular liabilities and, in addition, the agreed rate to pay.
In this calculation, the banks set lump sums for the livelihood of the person living in the household of the debtor – to “(mentally) want to save the installment” does not affect the calculation results of credit institutions: If the amount of income (in relation to existing Liabilities, including other credit obligations) are insufficient to ensure that the loan repayments are regular from the bank’s perspective, usually followed by a rejection – or the amount of the required loan amount would have to be reduced accordingly.
Added to this is the regular review of the data of credit bureau AG, which provide the bank with information about the past and possible future payment behavior of the future debtor: If this information is negative, the loan application is usually rejected.
Credit with a car letter – the own car as additional security
Now, once you realize that the bank’s main concern is to keep your own risk as low as possible, it is understandable that there is a possibility, even in the event of a first rejection of the loan application To negotiate: Because often the desired loan agreement comes off, if the applicant can provide additional security: The credit with a car letter is such a possibility: The bank receives the car letter from the car of the debtor and another agreement is made.
This means that the bank becomes the owner of the car if the borrower can not meet his installment payment obligations. In this so-called transfer as part of the loan with a car letter, the debtor can continue to use his car, as usual – but usually required by the bank that a fully comprehensive insurance is completed. The debtor receives the car letter back when the loan amount is fully paid back.