Car loans offer over normal installment loans the advantage of a more favorable interest. In return, the vehicle registration remains with the financing company as security, which is referred to as retention of title. Of course, it is reasonable to assume that a car loan can also be applied for with a negative credit entry.
What needs to be considered and which requirements must be fulfilled, will be explained in more detail below.
Car loan with negative credit – is that possible?
In principle yes! But it depends on whether the other conditions are met. Those who already have obligations from existing loans require a correspondingly high income, from which the debt service for a second loan can be provided. Banks and credit institutions check this very carefully and therefore demand the statements of account of the last months as well as up-to-date wage and salary statements.
Of course it is also a question of how high the current balance of the current loan fails or how many installments still need to be paid. If the loan is already close to being fully repaid, a car loan with a negative deposit will also be granted much faster.
If, however, the borrower does not have the income necessary to be able to serve two loans in the view of the banks, other alternatives must be created. One possibility is to look for a guarantor or co-applicant who can repay the loan. The guarantor is only asked to take over the debt service if the borrower can not or no longer wants to do so.
A co-applicant is directly involved in the loan agreement from the outset and should therefore ensure installment payments throughout the term. However, both are expected to at least meet the required credit rating requirements. This means in plain language that no credit entry may be present and also the income must be available regularly and in sufficient amount.
Most auto loans are made at a car bank, which often brings the customer the advantage of very favorable terms.
But if no car loan is granted here with a negative credit entry, other options must be exercised, which may however also come with benefits in the form of bonuses or discounts. All the more, the cheaper the loan is. For if you can act as a cash payer at the dealer, not infrequently strong benefits are granted, with which the credit costs can be compensated to a large extent.
The alternatives for the car loan with a negative credit entry
If banks, car banks and other credit institutions, for whatever reason, are not part of the available options for a car loan with a negative credit entry, there are still other opportunities to get a cheap loan. An example of this can be found in the policy loan. The prerequisite is a capital-forming life insurance whose current surrender value reaches approximately the amount of the required loan amount.
Because exactly this amount can then be borrowed from the insurance company, which is why it is also spoken of a loan of life insurance. The company, against which there is already a claim, bears only a small risk in this project, which is why the loan is also relatively cheap. It is important, however, that the insurance contract can show a sufficiently long term, otherwise not enough capital will come together.
A very different alternative is the private loan. Here you get your loan not from banks, but by private individuals.
These finance individual projects in order to generate a return on their part. The conditions here are often much cheaper, even for a car loan with a negative credit entry. Although a number of statements must be made here about your own credit rating, but the restrictions are not handled as strictly as it is used, for example, from banks.