Auto Loan Disbursement (Retail Vehicles)
Disbursing a 3-year auto loan directly to a car dealer on behalf of a retail customer.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Auto Loans Receivable | Asset (+) | 20,000.00 | - |
| Cash / Dealer Settlement Account | Asset (−) | - | 19,600.00 |
| Deferred Auto Loan Origination Fee | Contra-Asset (+) | - | 400.00 |
💡 Accountant's Note
Auto loans are typically disbursed directly to the dealer (not the customer). The vehicle registration certificate must show the bank's lien. EIR method applies to origination fees. Auto loans are usually for shorter terms (3-5 years) compared to home mortgages.
Practitioner & Systems Framework
💻 ERP Architecture
In Oracle FLEXCUBE CL, auto loans use a specific product type with collateral category 'vehicle'. The vehicle registration and lien details are captured in the collateral module. CBJ requires auto loans to be disbursed to the dealer, not credited to the customer's account.
⚠️ Audit Flags
Auditors verify that the vehicle registration in the Traffic Department shows the bank's lien (rahn) before or simultaneously with disbursement. Loans disbursed before the lien is registered are under-collateralized. Insurance policy assignment to the bank must also be in place.
📄 Required Documentation
Vehicle purchase invoice, Traffic Department registration showing bank lien, insurance policy assignment, credit approval, dealer payment confirmation, and customer loan agreement.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.