What happens to the vehicle title (KFZ-Brief) with a car loan?

The bank holds the vehicle title (Zulassungsbescheinigung Teil II) as security. You drive with Part I (registration). After full repayment, you get the title back.

Which is better: dealer financing or bank loan?

An independent bank loan often offers better interest rates. Plus, you can negotiate as a cash buyer at the dealer and get discounts of 15-20%. The sum of these advantages usually outweighs dealer financing.

Car Financing During Probation

Car Loan During ProbationUsing Vehicle Title as Security in Germany

Q: Can I sell the car during the loan term?

No, you cannot sell without the bank's consent since you don't have the vehicle title. If needed, you can pay off the loan early and then sell the vehicle.

With the vehicle title as collateral, your chances of getting a car loan increase significantly – even during your probation period. The security transfer (Sicherungsübereignung) makes it possible.

Vehicle as Security

Better Interest Rates

Higher Approval Rate

Why Car Loans Are Easier to Get

The vehicle serves as security. With a regular personal loan, the bank has no collateral. With a car loan, they can sell the vehicle if necessary. This lower risk leads to:

Higher approval chances

Lower interest rates

Key German Terms

Sicherungsübereignung = Security transfer (bank holds title)

Fahrzeugbrief / KFZ-Brief = Vehicle title (Zulassungsbescheinigung Teil II)

Zulassungsbescheinigung Teil I = Vehicle registration (stays with you)

Probezeit = Probation period (usually 6 months)

Effektivzins = Effective annual interest rate (APR)

Händlerfinanzierung = Dealer financing

What is Security Transfer (Sicherungsübereignung)?

Security transfer is the legal basis for most car loans in Germany. Here's how it works:

What the Bank Gets:

The vehicle title (Zulassungsbescheinigung Teil II)
Legal ownership of the vehicle
Right to sell if you can't pay

What You Keep:

Registration Part I (for driving)
Full use of the vehicle
Title back after final payment

The Process:

Sign loan agreement

Buy car, title to bank

Drive car, pay installments

Final payment = title back

Dealer Financing vs. Bank Loan

Criteria	Bank Loan	Dealer Financing
Typical Interest	From 2.99%	From 4.99%
Cash Buyer Discount	Up to 20% possible	No discount
Vehicle Choice	Completely free	Dealer only
Early Repayment	Usually free	Often restricted
Add-on Products	Not required	Often required

Cash Buyer Advantage:

With an approved bank loan, you can appear as a cash buyer at the dealer. This gives you negotiating power for discounts of 10-20% on the purchase price – often more savings than any interest rate difference.

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* Representative example: Net loan amount €15,000, term 60 months, effective annual interest 3.49% - 8.99% (credit-dependent). This is a brokerage offer.

What Happens If You Can't Pay?

Important to Know:

With a secured car loan, the bank has the right to repossess and sell the vehicle if you can no longer make payments. The process:

Reminders

The bank will send reminders and often offers solutions like payment pauses or refinancing.

Loan Termination

After several unpaid installments, the bank terminates the loan agreement.

Vehicle Return

You must return the vehicle to the bank. They sell it to cover the remaining debt.

Remaining Debt

If the sale proceeds don't cover the remaining debt, you must pay the difference.

The Advantage for You:

Because the bank is secured, they are more accommodating with car loans. They're more likely to work with you to find a solution before it comes to repossession.

Tips for the Best Rates

New vs. Used Car

New car loans often have better rates as the value is more stable. For used cars, the vehicle shouldn't be older than 5-7 years.

Make a Down Payment

A 10-20% down payment significantly improves your chances. The bank sees your financial commitment and offers better terms.

Choose Shorter Term

36-48 months is ideal. Longer terms mean higher interest rates and risk owing more than the car is worth.

Complete Documents

Employment contract (unlimited after probation), pay slips, bank statements – the more complete, the faster the approval.

Frequently Asked Questions

What is Sicherungsübereignung (security transfer)?

In a security transfer, you keep possession of the vehicle, but the bank becomes the legal owner until full repayment. You can use the car normally but cannot sell it. After the final payment, you receive the vehicle title back.

Why is a car loan easier during probation?

The vehicle serves as collateral. If you cannot pay, the bank can sell the car to recover the debt. This lower risk often leads to higher approval rates, even during probation.

Can I sell the car during the loan term?

Not without the bank's consent since you don't have the vehicle title. If needed, you can pay off the loan early and then sell the vehicle.

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