Do you own a car? More and more financial institutions are introducing the so-called car loan. What is this type of loan and is it really profitable for us? Read the article and learn more.
When to borrow money in exchange for a car loan?
People deciding to take out a car loan are usually, colloquially speaking, clung to the wall. This is the case when all financial institutions, both banks and loan companies, refused to help us because of a lack of stable income, bad credit history or adverse information in the BIK and BIG registers. You can read more in the article Reasons for rejecting a loan application . When nobody wants to give us a loan, the car lien turns out to be the only way out, what’s more, we can borrow a much larger amount than would be the case with a standard cash loan.
How the loan procedure works
If we have ever used online loans, we can confidently say that the procedures are almost identical. Of course, in the first place we choose the service / company from which we want to borrow money (before choosing let’s carefully read the loan regulations). Then we fill out the application available on the website, and then we only wait for contact from a company employee. During the telephone conversation, we fill out the loan application and then await its consideration by the lender.
After the application has been approved, the lender is obliged to provide us with the loan agreement along with such documents as the car transfer agreement and the power of attorney under which the lender will be entered as a co-owner of the vehicle.
The transfer agreement means that the lender becomes the owner of the car in 51%, which of course changes after we settle the entire liability. During the duration of the loan agreement, the car remains under our care and we can use it.
The procedures in this case are quite extensive. The next step is to proceed with the transfer of ownership agreement and the power of attorney to the appropriate communication department according to where you live. We submit an application on the spot to enter a loan company as a co-owner in the registration certificate. This should be done within 7 days from the date of the contract.
This is not all. After completing the above formalities, we need to send the lender a scan or copy of the new registration certificate, attaching the photo of the car, including the VIN number or photo of the windshield with the registration sticker.
Paying off the liability
When we fully pay the lender, he is required to send us a written declaration of release from security. After receiving the document, we again go to the communications department to re-register the car in our name.
Let us remember that by not paying back the loan, the car will become the property of the loan company. It will be auctioned off (with the court’s consent) and the money from the sale will cover all or part of our debt. If the amount received by the company does not cover our entire commitment, the loan company has the right to ask us for a refund of the remaining amount.
I want to pawn a car – what documents do I need?
As a standard, you will need your ID card to take out the loan, and in addition your car’s documents, where the most important is the registration card along with a valid technical review. The registration certificate must indicate that we are the sole owner of the vehicle.
In order for the loan to be granted to us, we must also provide information on valid civil liability insurance. Sometimes, loan companies also demand the assignment of an AC policy and a vehicle card, if issued.
What could the loan amount be?
The amount of credit that will be granted to us depends mainly on the age of our car. Loan companies grant loans against a car if the vehicle is not older than 8-12 years. The loan amount depends on the value of our car.
It should be remembered that the loan company when granting the loan also prepares a scenario in case we do not pay the liabilities – they must determine how much the car will be worth after some time. Therefore, it is not possible to clearly specify how much cash we will get, but these are values from several to several dozen thousand zlotys, which are repaid most often for several years in monthly installments.
Pros and cons of car loans
Like any type of loan, this one also has its pros and cons.
The disadvantages undoubtedly include the high cost of the loan and the need to transfer the ownership of the car to the lender. The extended procedure and the fear of losing a car when the loan is not repaid may also be discouraging.
In turn, the advantages mean that you do not have to think long about taking such a loan. We are certainly convinced by the possibility of borrowing a large amount the first time and the lack of the need to provide an income certificate. Pros include the quick credit decision and the possibility of applying for another loan, just after paying off the previous one.
If we find ourselves in a really difficult financial situation, it may seem that a car loan is our only solution and in many cases it is. Let us remember, however, that there are many loan companies on the market that meet the expectations of clients and for each client, and loan requests, approach individually. So before the final decision is taken to take the loan against the vehicle, it is worth sending us a loan application and we will check if we can help.