A Loan with car as collateral is a popular model. Many banks offer it. If you use your car as collateral for a loan, you can expect quick loan approvals and low interest rates on your car loan. Konto-Kredit-Vergleich.de shows which bank takes a car as security. The main advantages of a loan with a car as collateral:
- Favorable interest rates due to the high level of security for the bank
- Fast lending, since the risk is controllable for the bank
- at low income a way to get a cheap car loan anyway
Which bank accepts car as security? - Check here
In 2021 there are only a few banks that will take the car as collateral for a car loan. These include:
Konto-Kredit-Vergleich.de checked: Many banks offer one these days Loan without a vehicle registration certificate at. Presumably, the banks shy away from the expense of the additional check. Banks that will still accept your car as collateral include: Santander*targo bank*postal bank*SWK Bank*
The KFZ letter is deposited with the bank as security
Car as security - essential information at a glance
- Cars are tangible assets that can be used as collateral for loans.
- The car is from Santander* targo bank* postal bank* and SWK Bank* accepted as security.
- A loan with a car letter can be used for both new and used cars.
- You can improve your credit rating by car security.
- Banks ❤️ Collateral.
- Banks give good interest rates on a loan with a car as collateral.
- A Car loan without car registration there is from the norisbank* and the ING* and other providers.
request your loan with collateral right online via the comparison
Credit is important - good credit gives you better conditions
Whether it's a new car loan, a used car loan or another loan: the borrower's creditworthiness should be impeccable. For this purpose, the amount of income should be above the garnishment exemption limit. The garnishment exemption limit is 1,130 euros in 2021. More information about the garnishment exemption limits you can find under the link. But even if your income is less than the garnishment exemption limit, there are options:
You can use your car as collateral for the car loan
Do you have a low income? In this case, banks require collateral. One solution would be to give the car as collateral for the loan!
This means that the vehicle is used as a deposit. In this case, too, the borrower has the sole right of use.
However gives the bank the right to confiscate and sell the vehicle in the event of a loan default. The borrower deposits the vehicle letter with the bank. With the sale of the car, the bank pays the outstanding installments.
The borrower receives the KFZ letter back when the loan installments have been paid off.
✅ With a loan with a car as collateral, the award criteria are less strict. Nevertheless, the necessary creditworthiness must be available. ✅
Car loan with a letter as security: how is the security amount calculated?
The level of security is determined by the value of the car. The market value of the car at the time the loan was taken out is usually determined. However, banks often do not agree with this.
Banks often have the requirement that the time value should decrease during the term of the loan. For this purpose, the bank can request an inspection of the condition of the car. In this way, she can ensure that the resale value is within the expected range. This check could, for example, take place annually.
Due to the large amount of time involved, banks usually handle things more simply: the bank sets the current value of the car at a certain point in time. This, and the comprehensive insurance that is often required, protects the bank from the loss in value of the car.
In general, you should only take out loans that you can repay.
What is a car loan?
A "loan with car collateral" is a subset of one installment loan. By submitting the vehicle letter to the bank Expect less stringent checks on income and creditworthiness. Whether and to what extent the car can be taken into account as collateral for vehicle financing depends on the individual case Bank to clarify. Banks often do not take the full value of the car into account when borrowing, but instead make a deduction.
Another important difference between a loan with a car as collateral and a normal installment loan: the loan is earmarked. You can only use the money provided to finance your car.
By submitting the vehicle letter to the bank Expect less stringent checks on income and creditworthiness ✅
When does a loan with a car as collateral make sense?
If your credit rating is too low to take out a loan, the bank will require additional collateral. The car is accepted as collateral by most banks. If you can't get a car loan, have checked whether there are other options such as buy cash or leasing and your credit rating is not sufficient, it makes sense to include the car in the loan agreement as security. As a rule, the bank will not give you any other option anyway.
You should repay a loan with a car as collateral quickly. As long as the car letter is with the bank, the sale is difficult. How to proceed in such a case is explained here.
A loan with a car as collateral is primarily suitable for financing your vehicle. There can be a few other constellations, such as renovating your apartment with a renovation loan that the bank would only approve with a guarantor: As soon as you bring your car into play, the cards are reshuffled. It may well be that you will receive your restructuring loan without a guarantor through your car as security.
Many banks also require comprehensive insurance if the car is used as security. This protects both parties from financial risks in the event of an accident.
When you should stay away from a loan with a car as collateral
If it is a consumer loan, a car as collateral is superfluous. Because the loan is already sufficiently secured by other consumer goods. The effort and risk of adding a vehicle are disproportionate. Also at real estate financing is a car as security nonsense. With real estate as security, you get significantly better conditions.
In addition, it is not advisable to offer the car as security for another loan if you are threatened with over-indebtedness. Better get help from an independent debt counselor.
Alternatives to the car as loan security
If the value of the two- or four-wheeler is high, it can also be borrowed heavily. The value of the vehicle means that a loan can be taken out even if the income is otherwise too small for the loan amount. You can also use other two- or four-wheelers as collateral for the loan.
With low income, a longer term can also be a way out to get a loan. Due to the long term, the monthly charges are lower. This leaves a larger surplus for financing.
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Disclaimer: This is well researched but non-binding information.