The motor vehicle registration has been officially designated as registration certificate part II for several years, but the new term has not become established. Both consumers and banks speak of the deposit of the vehicle letter in connection with the lending. This is mainly done when financing a car, but a freely available loan can also be taken out cheaply from some banks by depositing the vehicle letter.
The classic car loan
Vehicle financing is the most common reason for a loan with a vehicle letter. Contrary to what many consumers assume, depositing the letter does not result in the vehicle being assigned, especially since this is regulated separately in the contract in the event of improper loan repayment. With the Good lender, however, the credit institution has the certainty that the vehicle buyer will not sell the unpaid vehicle without his consent.
Vehicle buyers can get a credit with a Good lender for their new car either at the car bank or at a commercial bank, whereby taking out a loan through a bank that is not affiliated with the dealer offers the opportunity to negotiate large discounts. The fact that the car bank provides a cheap vehicle loan is a measure of sales promotion.
The granting of new car loans by commercial banks at a reduced price compared to consumer loans is based on the strong competitive situation with the vehicle banks and on the increased credit security due to the deposit of the vehicle registration document and the simultaneous assignment of the car. The vehicle buyer will be given the vehicle letter as soon as he has paid off the vehicle loan in full.
The car as collateral for a free loan
A loan with Good lender that is not directly connected to the car is a relatively new offer that only a few banks offer. The prerequisite for borrowing is that the car to be loaned has already been paid off in full. When borrowing, the customer receives the desired amount, which, however, must not be higher than the current value of the car, and hands the vehicle letter to the bank. At the same time, he signs a declaration of assignment, so that if the loan is not repaid properly, the bank can sell the car. Many banks are now happy to see this loan against vehicle registration.
The loan against Good lender can be compared to a mortgage, but unlike pledging a car from a pawnbroker, the borrower can still use the car. At the same time, the legal stipulations regarding the term and the interest rate of classic mortgage loans do not apply to consumer credit with the letter as security. Rather, financial institutions grant a loan with Good lender on more favorable terms than an unsecured consumer loan, as they have an above-average level of credit security thanks to the deposit of the registration certificate.
Thanks to the real credit protection provided by Good lender, even borrowers with limited creditworthiness receive the loan by depositing the registration certificate. Similar to the financing of new vehicles, it is generally necessary to take out fully comprehensive insurance if you take out additional credit with the Good lender, so that the borrower and the bank are protected against vehicle loss due to an accident or theft.