Especially with a young family who has children, a car loan is often at the top of the wish list. Since the parental allowance only flows for a limited time, difficulties arise.
Practically solved – in four sentences
In spite of parental allowance, car loan is only unproblematic in two cases. Either the partner earns so much that his income and creditworthiness are sufficient or a second solvent applicant is necessary.
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Car loan despite parental allowance – problem
Anyone who starts looking for a car loan during parental leave should know that this is a rather unfavorable time. The state pays parental allowance to couples when they take care of their child at home after birth. But unfortunately only for a limited time. Parental allowance is granted to parents who put their career in the background because of their child’s upbringing.
The amount of the parental allowance is based on the previously received remuneration. The parental allowance is 67% of the last net income.
A maximum of not more than 1800 USD will be paid.
The staggering looks like this:
If the earnings are below 1200 USD, the state pays about 67% income compensation. The paying agent transfers only 65% to those who earn more. Parental allowance is paid for at least two to a maximum of 14 months.
Car loan despite parental allowance – creditworthiness despite parental allowance
Parental allowance is a benefit paid by the state. The service is therefore considered attachable. That’s why banks don’t count parental allowance on a couple’s income. For a car loan, only the income of the working partner remains on parental leave.
This is the only way to ensure credit security. This shows the problem in the increase in the garnishment exemption limit. In order to give a creditor the opportunity to access the income, the maintenance claims must be covered by at least two other people.
So it can be assumed that a normal work income with the normal obligations no longer allows a loan. All lenders are obliged to put credit security at the forefront.
Car loan despite parental allowance – opportunities
Every lender expects collateral if it is to approve a loan. A car loan is only granted with the parental allowance if the partner’s income is sufficiently high. It must come from a permanent employment relationship that has existed for at least six months. For security reasons, the bank usually sees the account statements.
This enables the bank to check whether payments are received on a regular basis that can be used to seize wages in the event of a loan default. However, the chance of approval can be increased by additional security.
For example, it would be conceivable to make a high down payment from the savings. With 50% down payment or more, hardly a car bank will refuse to buy the car.
Car loan despite parental allowance – earmarked car loan
If the partner’s income is sufficient despite parental allowance, most opt for a dedicated car loan. To do this, they then deposit the vehicle letter as security with the lender. As a result of this measure, the car becomes the property of the bank. However, the bank requires a signed assignment of security.
The borrower remains the owner of the car. However, if there is a loan default, the bank can sell the vehicle and thus cover the remaining debt.
The car dealer often only offers the dedicated car loan for buying a car. With the online credit for car purchase, on the other hand, there are offers for vehicle financing and debt rescheduling. Since the vehicle letter brings more security to the bank, it will be given financing with better interest rates.
However, if the borrower does not deposit the vehicle letter within four weeks, the bank can credit higher interest rates. It would also be conceivable to terminate the loan because of a breach of contract.
Car loan despite parental allowance prospects
When car loan during parental leave, where a partner receives parental allowance, the special situation must be considered. One parent is on parental leave, which means that this person cannot take out a loan.
Parental allowance is not sufficient even as a guarantor or co-applicant. The reason is the limitation of this state benefit.
The bank is therefore unable to plan reliably, since it does not know whether the partner will return to work after parental leave. Because, often after the end of parental leave, the mothers stay at home with the child for a while. During this time, the parental allowance will of course no longer apply. Therefore, the banks lack the confidence to recognize the actual solvency through the parental allowance.
A car loan would then only be possible if the working partner had a very high income. His income must be so high that he can use it to feed his family and also pay the loan installment. If the income is not sufficient, in addition to the safety of the car, a solvent guarantor could ensure that the car loan is approved despite parental allowance.
Car loan despite parental allowance – requirements
Banks want to see collateral if they are to grant a car loan. In addition to the security provided by the vehicle registration, a solvent guarantor can also secure the loan.
This guarantor must:
- have a sufficient income
- a permanent position
- and a clean credit bureau
In addition, the guarantor must be made aware of the risks of a guarantee. The borrower must also have a permanent job in addition to his sufficient income. The unencumbered credit bureau is also important to him: if there are negative entries, every regular bank rejects the loan.
If the credit requirements match those of the bank, a car loan is approved despite parental allowance.