The car is included in the list of the property that the bank considers as a potential collateral. Transport as a mortgage instrument in the banking classification is in second place after real estate. A loan secured by a car is often the only way to purchase a personal vehicle. How to get a loan of this kind? In general, similar to consumer loans. In general, there are two possible options under which the car goes into the bank’s collateral property:
- the client owns a car, but he urgently needs money for some other needs. Ideal option to get a loan secured in a banking organization, using this movable property for security. Consumer loan in the amount of 100 thousand rubles for the owner of the car in general, take no problem;
- the client is going to buy a car, but where to get the money. Here is the same principle as with a residential mortgage: the bank gives the funds, the borrower buys a car for them, after which the transport is immediately issued as a mortgage property for the bank. The client becomes the full owner of the purchased car only after full settlement with the bank.
The degree of freedom of the borrower in the use of mortgage “iron horse”
Now almost any bank in the Russian Federation supports the “Car Loan” program. At the same time, the transport remains physically with the borrower. It is extremely rare when the acquired credit car remains in the bank on bail until the debt level off. This largely depreciates the meaning of buying on credit. Now almost all banks have abandoned this practice. Those who still left such an unpleasant condition for the borrower, are forced to make profitable loan offers. Otherwise, the entire clientele will simply swim away to the competition. For example, if you agree that the car will still remain in the parking lot of the bank, the client may require a longer period, which will reduce the monthly fees.
A bank loan, when a client gets the opportunity to drive a mortgage car, is called “a loan secured by TCP”. PTS is a vehicle passport. When making a loan, the borrower for the period of the debt gives the TCP and a duplicate set of all the keys to the car to the bank. Then you can safely ride. Strictly speaking, this method is called “a loan secured by a TCP”, and in the case of a loan secured by an auto, the “iron horse” remains on the parking lot for the entire loan period. But these subtleties in the definitions can not be observed. So, the borrower has the right to:
- use the vehicle purchased on credit at any time;
- conduct regular inspection, minor repairs and tuning cars (if it does not affect the cost characteristic);
- to drive a purchased car at least within the region or district, or throughout the country (to be negotiated when concluding a loan agreement);
- the borrower does not just have the right, but under the terms of some banks is still obliged to insure the car against accidents, theft and fire (the most frequent types of damage) through the hull insurance system.
Insurance of a vehicle purchased in debt is highly recommended, since in case of unexpected material damage in the form of loss of a car, the borrower will receive monetary compensation, which will help pay off the loan. Otherwise, the client risks being in a position where there is no car, and there is a debt to the lender. In addition, in such circumstances, the bank may bring the loan repayment time closer (which will increase the monthly payments), since the absence of collateral enhances the risks, which means that we must quickly finish the business with such a client. Therefore, for example, it is very difficult to buy a domestic car without a CASCO policy on credit or mortgage to receive money.
What must a borrower comply with?
While the car is owned by a credit institution, i.e. the loan is not repaid, the borrower has no right to:
- try to lay the already laid car. For example, when trying to borrow money from another bank. The financial institutions first of all check whether there are no encumbrances on the property that the client offers as security for the loan;
- make some serious technical changes in the design of the machine that could lower / increase its market value (for example, replacing the engine, the “collapse – collapse” system, etc.);
- radically change the appearance of the car, i.e. capital tuning. The model and brand must be clearly defined, otherwise it will again affect the market price;
- travel by pledged car outside the country (only if there is no special agreement with the bank);
- it is impossible to give, put up for sale, rent, because a car before the cancellation of a loan is considered bank property;
- the client has no right to “launch” movable property, which, as stated in the bank agreement, belongs to the beneficiary for the period of the loan. That is, the borrower is obliged to monitor the health of the machine, eliminate minor flaws resulting from the operation, conduct regular diagnostics.
Basic conditions of auto loan
It is clear that in case of violation by the borrower of its contractual obligations, the institution confiscates the transport, and then puts it up for sale for damages. When the car is pledged, is it possible to say that as the debt is repaid, the client becomes more and more its owner? No, the full right of ownership is transferred at once, simultaneously to the client after he has made the last loan payment. A car loan (or a consumer loan with a car deposit) has the following general conditions:
- size – up to 15 million rubles (depending on the machine chosen and the borrower’s solvency);
- sometimes you can choose the type of contributions (annuity or differentiated);
- the bank will give out so much money that they will make up a maximum of 80% of the market price of the car (usually 70%). Firstly, the institution is always insured in case of a fall in the market price, and secondly, in case of confiscation, the car should be sold as quickly as possible, that is, at a price slightly lower than that of other similar machines;
- the possibility of early full payment without commissions and additional interest is always provided;
- Most organizations dictate to the client some restrictions on what kind of car to take. For example, cars of too low price category (less than 100 thousand rubles) and too high (more than 1.5 million rubles) are not popular with banks for obvious reasons – low-cost transport is most often sold in pawnshops, a second-time vehicle will have, if that It’s very cheap to sell, and the buyer can hardly find an elite product quickly.
It can be seen that somewhere around the fifth part of the cost of transport the borrower will have to pay out of his pocket at the same time. Statistics show that a consumer loan secured by a car in a bank is sold for the purchase of cars of the Lada Kalina type, Ford Focus class sedan, etc. That is, the average price category (300–500 thousand rubles).
Question with documents
The set of documents, which means that the set of requirements for the borrower in all banks in the field of car loans is standard, but due to the fact that this is a vehicle, there are several additional points:
- Russian passport with a residence permit (permanent residence);
- age from 21 to 65 years – without a guarantor, up to 70-75 years – with a guarantor (the upper age bar is indicated at the time of repayment of the loan);
- half a year of work at the last vacancy and the year of the total seniority of all official employment that the borrower had;
- certificate from the tax service / accounting department at the place of work in the form 2-NDFL, showing that the borrower has a salary, the amount of which will allow you to pay the loan monthly, remaining at least with the minimum subsistence level;
- from a possible guarantor – passport and certificate 2-NDFL;
- absence of debts on other loans;
- driver’s license;
- auto insurance policy in the hull insurance system (required in 85% of all cases);
- PTS (vehicle passport);
- and, of course, a completed application form.
By the way, the age of not only the borrower, but also the car is important. It is unlikely that a Russian bank would agree to lend money to a client who pledges to offer a foreign car over 10 years old or a domestic / Chinese car over 5 years old. And it does not matter whether this money is needed for the purchase of a used car or a person offers his car as a pledge to receive finance for other needs. The main performance characteristics, make, model and year of production of the machine are listed in one document – the transport passport (PTS). The PTS car loan is mandatory, as it contains key information on the subject of the pledge, showing its approximate market value. Before concluding an agreement, it is always better to examine in detail the full range of banks and a set of their proposals. This optimizes the loan.
Bank or pawnshop?
Above, the article already mentioned auto pawnshops. This option of taking a loan, as many people think, is an “extreme case”. The reason for this is simple – the monthly percentage for using credit funds in them is somewhat higher than in any bank. At times, the difference in interest rates can range from 0.5 to 3%. But with all this, the appeal to the pawnshop has its advantages: a free car assessment, the minimum set of necessary documents, and most importantly, quick loan processing. Indeed, in some banks, the procedure for issuing loan funds on the security of a car can last up to 2 days, while any pawnshop does the same procedure in 2-4 hours. There is also one more important plus pawnshop – if you take a loan on the security of a car not for the first time, that is, you are a regular customer, then a special discount system will work for you. This is where banking institutions lose, because the monthly interest rate on the discount system can be reduced by 15-50%. Thus, the monthly payment on a loan in the pawnshop will be significantly less than that of any bank, where the conditions for obtaining loan funds are established by current legislation and do not provide for any discounts.