Auto Loan Security Agreement Template for Saudi Arabia

The Auto Loan Security Agreement is a critical document used in Saudi Arabian vehicle financing transactions to protect the lender's interests while ensuring Shariah compliance. It is typically executed alongside the main auto financing agreement when a vehicle is purchased through Islamic financing methods. The document establishes the lender's security interest in the financed vehicle, outlines the borrower's obligations regarding vehicle maintenance and insurance, and specifies the lender's rights in case of default. Given Saudi Arabia's dual requirements of regulatory compliance (particularly with SAMA regulations) and adherence to Islamic finance principles, the agreement must be carefully structured to avoid conventional interest while maintaining effective security provisions. This document is essential for financial institutions offering auto financing in Saudi Arabia and requires consideration of both civil law elements and Shariah requirements.

1. Parties: Identification of the Finance Company (Secured Party), the Borrower (Grantor), and any guarantors

2. Background: Context of the agreement, reference to the main Auto Finance Agreement, and Shariah compliance declaration

3. Definitions: Key terms used throughout the agreement, including Vehicle, Secured Obligations, Events of Default, and other relevant terms

4. Grant of Security Interest: Creation and detailed description of the security interest in the vehicle

5. Vehicle Description and Ownership: Detailed description of the vehicle including make, model, year, VIN, and confirmation of ownership status

6. Representations and Warranties: Borrower's declarations regarding vehicle ownership, condition, and absence of prior encumbrances

7. Covenants: Borrower's ongoing obligations regarding vehicle maintenance, insurance, usage, and notifications

8. Insurance Requirements: Specific requirements for vehicle insurance and assignment of benefits

9. Events of Default: Circumstances constituting default under the agreement

10. Enforcement Rights: Secured Party's rights and remedies upon default, compliant with Saudi law

11. Term and Termination: Duration of the security interest and conditions for termination

12. Notices: Process and requirements for formal communications between parties

13. Governing Law and Jurisdiction: Application of Saudi law and designation of competent courts