When a car loan is granted, the vehicle buyer usually deposits the vehicle letter with the bank that finances the vehicle as additional security. Today, some commercial banks offer vehicle loans even without the vehicle letter being deposited.
These are mainly used to simplify loan processing and should not be confused with vehicle financing without the vehicle being assigned as security. Such is not tied to the deposit of the vehicle letter.
A common misunderstanding
If a car loan is issued without a vehicle letter fee, the failure to deposit does not mean the bank waives the car it has financed as security. In fact, the delivery of the vehicle letter to the bank effectively precludes the resale of the car, but it does not serve as a pledge. Rather, the bank has the right to sell the vehicle in the event of improper loan repayment explicitly confirmed in the loan agreement.
The conditional pledge of the car also applies if the vehicle letter is not to be deposited with the bank. A car loan without a car letter does not allow the vehicle buyer to resell the car without the express consent of the bank. Although this is actually possible and effective due to the good faith vehicle purchase made by the new buyer when the vehicle letter is handed over, it is also a criminal offense.
The illegal sale of vehicles will of course only be prosecuted if the borrower does not actually repay the loan properly. An actual advantage of car loans without vehicle letter delivery is primarily for the bank. It does not have to guarantee the costly safe storage of the stored vehicle letters, while it retains the right to exploit the financed vehicle thanks to the security appropriation that is still required.
Consumer loans for buying a car
Consumers mostly want a car loan without a car letter, so that they can dispose of the car at will. However, this presupposes that they take out a non-discounted consumer credit for buying a car. Taking out a consumer loan for buying a car is possible given the usual loan amount and vehicle prices for the purchase of a small car and a cheap, lower-middle-range vehicle.
In this case, however, the borrower waives the interest discount granted by many banks for a car loan. However, he can sell the financed car at any time without the bank’s consent, since consumer loans are not assigned to a specific purpose.
The waiver of fully comprehensive insurance for the car does not make sense even with a consumer loan as a car loan without a vehicle registration fee, since the vehicle buyer would otherwise no longer have a car in the event of a total loss due to a self-inflicted accident or theft of the vehicle, but would still have the one taken up for the car purchase Has to pay off the loan.