Many people are unaware that they have the credit protection that would be enough to start a small business: their own car. The reason why many are not yet aware: Banks do not recognize a vehicle as security. The problem is as old as the credit itself: If you have bankable collateral, you basically do not need credit. If you need a loan, you often do not have bank-standard collateral. Escaping this vicious circle is not easy. But there is a remedy.
Anyone who does not get credit from the bank because their credit rating is not enough for this, in most cases addresses their private environment. And then the next vicious circle opens up: People who have such wealthy friends or family members that they could help them out with a personal loan usually have enough money or bank creditworthiness of their own. Unfortunately, in most cases, the financial possibilities in the circle of acquaintances or in the family are about the same as their own. Therefore, from this side is usually no help to expect.
An alternative that has recently evolved is credit portals. Loan seekers will report on their needs and many small lenders will provide the amount they want – if all goes well. The problem is that even credit platforms usually carry out a credit check, and that is similar to that of banks. Also, if you make it through the credit check, lending is not yet in the towel. The lenders often rate the loan application very subjectively. In other words, the loan application must “please” them to support it. This makes the loan application often a gamble.
Back to top. Basically, there is a high-quality credit security: the own vehicle. Stupid only that neither banks nor friends or credit portals acknowledge that. Here enters a new actor the stage: the pawnshop. These useful facilities value and lend items – without a credit check, with no proof of income, without Schufa – but there has been one drawback to this: regular pawn shops are overwhelmed with the lending of high quality items. Their business is in the two- to three-digit range, sometimes in the four-digit range. This circumstance was the reason for the birth of the Credit Pawn houses.
Credit Pawn – what is that?
Manor houses are closing the gap in credit supply for middle-credit borrowers with low credit ratings. The Credit Pawn is a pawnshop like any other, just in the higher value range. And a lending business is basically just lending – a fact that many people are unaware of.
The loan by car head can – if desired – go very fast. The vehicle is driven up, valued by the pawnshop, the mortgage loan contract is signed, the amount paid out against the delivery of the car papers – done. In rare cases it may happen that the pawn shop pays some time for the technical valuation, but also in this case, the payout is made considerably faster than with the lending by the bank.
A loan on the path of autobahn brings some significant benefits. Of course, the most important thing is – as already mentioned – independence from one’s own credit rating. The rating of Schufa does not matter, as well as the amount of current income. The asset statement can stay in the cabinet. All that matters is the vehicle, its time value and its technical and visual condition. Only these values decide on the lending. Add to that the rapid processing and payment.
An aspect that speaks for the loan by hand, has not yet been discussed: the variable duration. While bank loans – but also private loans – generally have a fixed term, the borrower himself determines when the time for repayment has come – of course within the agreed deposit period. The early repayment is excluded in many conventional credit agreements or associated with significant additional costs. Not so with the car’s head. Here, the borrower determines when it’s time – without any deductions.
Credit-free credit requires self-reliance
In order for the loan by hand to become a thoroughly positive experience for the borrower, some honest considerations are needed on his side before taking this step.
Being able to take out a mortgage loan without a credit check and proof of income is a great opportunity to implement personal plans and achieve goals. But it also requires an open and honest assessment of the personal situation – so to speak a self-initiated credit check on their own behalf.
Even if your own income or assets are not proven, it must still be present at the time of repayment – at least, if you ever want to see his mobile base again. In other words, there must be a concrete and realistic plan for how repayment should be made. Therefore, any person looking for a loan should first ask these questions:
- Am I able to repay the loan?
- When will the time of repayment be?
If there is a satisfactory answer to both questions, nothing is in the way of the Credit Pawn. Especially with the question of whether the repayment is possible within a few months, the loan seeker should not indulge in any wishful thinking of the kind “that works anyway”. There must be concrete indications that the possibilities for repayment exist. This can either be a new job with a decent salary, or the prospect of a larger income, such as an inheritance or a severance pay.
This results in the characteristic of the loan per capita. He is not a heavenly gift that lets a money flutter in the lap, for the repayment then takes care of a higher power. It is a bridging measure in the event of a liquidity shortage until the arrival of the income that makes the repayment possible.
A matter of minutes
As mentioned above, the lending and cash payment is completed in no time. Only rarely is more than an hour required, usually less. This is how the process works:
- Step one: The loan seeker drives his vehicle at the Credit Pawn home.
- Step two: The vehicle is checked and evaluated.
- Step three: The Credit Pawn house proposes a loan amount.
- Step four: The mortgage loan agreement is signed.
- Step five: The payout goes to the borrower.
Another advantage of autopowder is the transparency in pricing. The starting point is the actual value of the presented automobile. Of these, a discount is taken into account as collateral. This may look like this: The current value of the vehicle is 20,000 euros. After deduction of the security discount of 7,000 euros (example value), the loan payment is 13,000 euros. This amount is then used to write the pawn rental contract, which also contains the other conditions, such as interest, fees and the pledge period. The possibility of being able to trigger the vehicle before the end of the pledge period is also part of the pawn rental contract.
A look at the disadvantages
As with all interesting things, there are also some disadvantages in the pledge and the Credit Pawn, which should not be overlooked in the overall assessment. The most obvious are the borrowing costs. Of course, lending to a low-rated borrower presents the lender with an increased level of risk that must be balanced financially. The difference to the regular bank loan is in the acceptance threshold. This is the limit above which the lender no longer considers lending credit acceptable even with increased borrowing costs and rejects the loan.
Anyone who has ever tried to obtain a bank loan with low credit quality knows that the acceptance threshold for banks is extremely low. Even with minor credit ratings, the bank is unwilling to grant the loan, even with increased borrowing costs. This is the big difference to the autopoand, because here is an acceptance threshold as good as non-existent.
However, what remains is the risk assessment that an Credit Pawn home must make in order to avoid getting into trouble. As a result, there are higher borrowing costs for the Credit Pawn than are usual for a bank loan. This is not necessarily reflected in the interest rates that are currently relatively low on the autopoand. What makes a noticeable difference is the deposit charge, which in most cases is additionally estimated. It is usually between two and three percent – per month. A bank loan costs about the same, but every year.
The loan seeker should be aware of the magnitude by a concrete example before the final decision is made. With a loan amount of, for example, 10,000 euros over six months and a deposit of three percent, this alone will cost 1,800 euros – in addition to the interest on the mortgage loan.
The second major drawback is the loss of the vehicle during the pledge. With the classic car head the borrower has no access to the car – it is safely kept in the Credit Pawn house. If it is not possible to realize the way of life or the profession by alternative means of transport, plundering one’s own vehicle may lead to serious problems. Usually the temporary change to public transport, the bicycle or the scooter works. If not, there are few alternatives. The result is an obvious fact: If you can not do without your vehicle, you must say goodbye to the loan option “Credit Pawn” – or maybe not.
Bond the car and still use it – is that possible?
Increasingly, there is an alternative form of auto-crop, which is offered by a growing number of Credit Pawn houses: the Credit Pawn with onward option.
Legally, this is not a mortgage business. Rather, the loan seeker sells his vehicle to the Credit Pawn home and then rents it back. In this way, the payment of a sale proceeds in the amount of the desired loan amount possible, and yet the seller remains available to the seller for use. As a rule, this solution is noticeably more expensive than the classic car head, since it also includes the fee for the continuous use of the vehicle. Nevertheless, this variant can prove to be an ideal solution in specific life situations – for example, when a business start-up has started, but the indispensable vehicle is the only credit security.
Skillfully timed – the alternative to the onward option
In many cases, proper scheduling can cleverly solve the problem of the unavailable vehicle. If it is not about a current loan requirement, which requires the payment within a very short time, the time management can serve as a problem solver. Here are two examples:
The summer solution
Loan seekers who miss their vehicle, especially in the cold season, while they have no problems in the warm season, even once to take the scooter should lay the pledging date for the spring. So there is enough time during the summer to ensure timely repayment and to have the well-heated car available again in time for the start of winter.
The winter solution
This variant is particularly suitable for owners of a seasonal vehicle such as a motorcycle. So the bike can be mortgaged exactly in the period in which it would be canceled anyway and parked unused. In time for the first spring break it can then be triggered again.
Conclusion to the Credit Pawn
The Autopoad is the ideal loan solution for people with low credit ratings or for borrowers who value very fast settlement and payout. Although the costs are higher than for regular bank loans, this alternative is clearly better than having to do without important projects altogether. The disadvantage of not being able to use the vehicle while pledging can be avoided with a follow-up option. Timely planning of the pledge can compensate for the loss of use in whole or in part.