Vehicle Security Agreement

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A vehicle security agreement is used when a customer purchases a vehicle that the buyer requires collateral for. Car dealers often require this agreement when a buyer's credit rating is not high enough or when the buyer has no money for a down payment.



Vehicle security agreements protect the sellers of automobiles. If a customer defaults on payment, the seller can go after the collateral listed in the agreement. The collateral secures the sale of the vehicle.

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The security agreement outlines all terms and conditions regarding the collateral provided by the customer purchasing the vehicle. Collateral can be many things, including equipment, machinery, farm products and stocks and bonds.



A vehicle security agreement includes the names of the parties, a description of the vehicle and the vehicle's make and VIN number. It also contains the warranties and covenants of the seller, consequences for payment default and a description of the offered collateral. The agreement must contain both parties' signatures.