More than 30 percent of all car purchases today are financed through a loan. These are usually either a car loan or installment loan from the bank or as an alternative, many buyers of a new or used car also rely on dealer financing. In most cases, however, the loan seeker must meet some requirements as to their creditworthiness.
In addition to regular income, this includes in particular private credit information, which does not contain any negative entries. But how can a car finance be carried out if there is a negative entry, such as a reminder or an affidavit?
Numerous providers provide car loan
In addition to ordinary branch and direct banks, the market now has numerous providers who have also specialized in the provision of car loans. But even with the “normal” banks, customers often have the opportunity to carry out a car finance. For example, the following banks and financial portals offer loans that can be used for car financing:
While you certainly know the three banks listed above, concerns with Autoswatch to a specific credit portal that specializes in the field of car financing. There, borrowers have the opportunity to take out the matching loan for auto financing. However, it is also on this portal so that – as incidentally in almost all banks the case – a clean private credit information is a mandatory requirement for the award of a car loan. So is the question still open as to whether it is possible to carry out a car financing despite a negative private credit?
Loans without private credit as a possible solution
An often mentioned solution when it comes to financing despite negative private credit entries is the loan without private credit.These special loan options appear more and more often on the Internet, where they are also available as private credit-free loans, Swiss loans or loans despite private credit designated. Loans without private credit have the essential characteristic that the respective lender does not obtain private credit information. This inevitably results in any negative entries that have no impact on the assessment of the customer’s creditworthiness. Such loans without private credit you can usually use for any conceivable purpose, including, inter alia, for auto financing.
However, you should only opt for such a loan without private credit under the condition that you actually do not receive loans from other banks and loan portals because you have a negative private credit entry. The private creditfreien loans are on the one hand not favorable and on the other hand, unfortunately, many dubious offers on the market. Of these dubious loan offers, which often come from credit intermediaries, you should definitely refrain. Often, you will be asked to pay the commission you are due for, without seeing any money at all. On the other hand, despite numerous negative offers in this segment, on the other hand, it is quite possible to find reputable loan offers in the Loans without private credit division. These can actually serve to finance your car despite negative private credit.
Under what conditions are loans granted without private credit?
Many credit seekers with a negative private credit entry believe that it is relatively easy to obtain a loan without private credit, because the negative entry in the private credit does not matter. However, practice shows that exactly the opposite is the case. Precisely because private credit information is not used to assess creditworthiness, credit intermediaries and lenders place even greater importance on the other characteristics on which creditworthiness is to be assessed. Therefore, the achievable income on the part of the person seeking credit as well as possible collateral play a major role.
In general, these are the following requirements that you must meet in the vast majority of loans without private credit:
- Income results from dependent employment
- Trial finished
- Permanent employment
- At least two years employed at the current employer
- Residence in Germany
- At least one security can be provided
Apart from the fact that negative private credit characteristics are insignificant for a loan without private credit, so relatively strict conditions apply if you want to receive debt-free loans and then use them for auto-financing. For example, you need not only have a regular income, but that income must normally result from dependent employment. In addition, the probationary period not only has to be completed, but it is usually assumed that you have an indefinite employment contract and have already been employed by the previous employer for at least two years. Among other things, this results in the fact that normally students, trainees and low-income earners, self-employed or freelancers have the opportunity to carry out auto-financing by means of a loan without private credit. At this point, we would like to go even further into this point, namely on the subject of collateral.
Car financing without private credit with a guarantee as collateral
Not a few lenders and credit intermediaries who specialize in the field of credit without private credit advertise with statements such as “Car finance despite private credit with guarantors!”. Behind this is a loan without private credit, which of course can also be used to finance a new or used car, but only on the condition that you as a loan seeker can provide a guarantor. However, as you may already suspect, the guarantee alone is often not enough, as lenders also make some demands on the guarantor, such as:
- Guarantor must prove sufficient income
- Guarantor must have assets
- A joint and several guarantee must be taken
- Guarantee extends over full loan amount plus interest
The problem with car financing despite negative private credit, in which the lender demands a guarantee, is for many loan seekers that financially rather weak people who also have a negative entry in the private credit, not very often have financially strong guarantors. However, if a person, such as a family member, agrees to take out a guarantee, the aforementioned conditions generally have to be met. In any case, the guarantor must either have sufficient assets or earn an income from which the open loan commitment can be settled in the event of a case. If assets are available, the lenders can usually assign or pledge this up to the amount of the loan sum plus interest, depending on the form in which the credit balance is available.
In this sense, a surety that is taken in by the lender as collateral is often almost indirectly equivalent to a double collateral. The lender then not only has the guarantor with his income as collateral, but rather often has that guarantor additionally assign or pledge existing assets. For that reason, as a loan seeker, you should only ask a person for a guarantee that you trust on the one hand, and that, on the other hand, there is actually no other financing alternative.
Are there alternatives to the guarantee as collateral?
For obvious reasons, many loan seekers, who on the one hand have a negative entry in the private credit, on the other hand, but need to carry out a car financing, no close friends or family members ask for a guarantee. Therefore, there is the perfectly legitimate question of whether, for example, in the case of a loan without private credit, where the guarantee is more frequently demanded as collateral, there is an alternative in the form of other collateral. In fact, there are quite a few other collateral available on the market, which in principle can also be used for this financing option, namely:
- Chattel transfer of the vehicle
- Assignment of claims
- Pledging securities or account balances
In particular, the transfer of ownership of the vehicle to be financed is definitely at this point a very appropriate loan security and is therefore usually accepted by almost any lender who is active in the field of auto financing. However, this often does not apply to credit intermediaries and lenders in the field of non-private credit credit, as they consider it technically simply too cumbersome to look more closely at the value of the vehicle and hence the value of the transfer. Instead, a “simpler” security is usually required, such as a guarantee or an assignment of claims. This usually means the cession of life insurance, more specifically: life insurance. Here, there is always a surrender value, which can also serve as collateral.
Although the pledge of securities or savings as an alternative credit security in principle, is questioned, but in practice, it is of course rarely the case that persons with a negative private credit entry who finance their car through a loan, on the other hand, larger account balances have. Even if there are securities in the custody account, selling at the current time could be problematic because it would involve price losses. In that case, it is certainly a possibility to at least ask the creditor whether, instead of the guarantee, he would accept a pledge of securities. In that case, the sale of the securities would not have to take place, but instead the custody account will simply be blocked, allowing the lender to dispose of the securities in the event of a claim.
Conclusion to finance the car without private credit with guarantors
For example, if you need a new car for business reasons, but have a negative entry into the private credit, there are not many ways to finance it. Both the bank’s traditional installment credit and car loan and dealer financing usually fall away when a negative private credit entry is made. Therefore, in addition to a loan from private only the credit without private credit often remains, which can also be used for car financing. However, you often have to provide credit security, which is often a guarantee. Please think carefully about whether you would actually like to ask a close friend or family member for this surety, or that there may be other alternative collateral that you could use.