Everyone comes to a point at some point where they need money quickly - be it because of overdue bills, accruing credit debts, job loss or because of a necessary and cost-intensive purchase. There are many reasons for financial difficulties. The first way here is usually to your own house bank. But what do you do if they refuse (further) credit because the creditworthiness is insufficient or the overdraft facility has already been exceeded? Who will give you a loan now? How is it with SCHUFA?
For many, a car deposit is a good way to get money quickly, but there are countless offers on the market - one more tempting and more promising than the other. It often doesn't take long before you read the seemingly redeeming words: "Borrow a car and drive on." Get money and continue driving your own car? That sounds almost too good to be true and unfortunately it is!
What you need to know about sale-and-rent-back
"Borrow a car and drive on", "Sale and rent back", "Sale and lease-back financing", "Rent back sale" - All of this basically means the same thing: you sell your car and rent it back from the lender! This has nothing to do with borrowing. The customer is led to believe that it is child's play to make money without any risks and that on top of that, they can still own their vehicle. However, this procedure is prohibited by law for pawnbrokers:
"The commercial purchase of movable objects with the granting of the right of repurchase is prohibited." (Section 34 Paragraph 4 Trade Regulations)
This is by no means a special form of a pledge contract, but a purchase contract with the right to withdraw or repurchase. To get around this and to make it as difficult as possible for potential customers to recognize this scam, some providers have come up with promising names for their dodgy business models.
Borrowing from the car and driving on - how legal is that?
Both the Administrative Court in Munich (2016) and the Higher Regional Court of Munich (2017) had to deal with the subject of “borrowing from a car and driving on”. They came to the conclusion that the sale and rent back model was not compatible with Section 34 (4) of the Trade Regulations. Since then, these providers have been using terms such as “alternative to car pawn shops” to avoid conflict with the legislature. So it is definitely not illegal, but it is a legal gray area that does not come along without risks and pitfalls. In concrete terms this means:
- You are no longer the legal owner of your vehicle
- Often times, you only get a fraction of what you would get in a reputable auto pawn shop
- Some providers do not agree to a buyback option in the contract
- If you are unable to repay the installments (even if it is only once), the provider, as the owner, is authorized to have the vehicle picked up
- “Borrowing from the car and driving on” is often significantly more expensive than the classic car mortgage loan
What are serious alternatives?
On the one hand, of course, you could also sell your vehicle directly and thus get more money than in the case of a purchase contract with the right to buy back, but that would also mean that you would have to say goodbye to your vehicle for good and thus give up your mobility. A serious and less painful alternative is to go to the classic car pawn shop. Some providers, such as 123 deposit, also offer the option of renting a replacement vehicle for the duration of the contract. That means in plain language: You bring your car to the vehicle pawn shop, in return you receive a pawn loan, which is based on the current value of your vehicle and still remain mobile - completely without risk and legally correct.
Of course that had not been the case.
tuningblog.eu has a lot of other articles on the subject of auto & tuning in stock. Do you want to see them all? Just click HERE and look around. But also planned changes in the law, violations in road traffic, current regulations in the field of STVO or on the subject inspection we would like to inform you regularly. Everything you can find in the category "Test sites, laws, offenses, information". Following an excerpt of the last information:
"Tuningblog.eu" - we keep you up to date on the subject of car tuning and car styling with our tuning magazine and we present you the latest tuned vehicles from all over the world every day. It's best to subscribe to ours Feed and will automatically be informed as soon as there is something new about this post, and of course also to all other contributions.