Paranoid schizophrenic Sukhwinder Singh killed his brother-in-law before driving his body to a police station.
He was arrested by officers from West Bromwich Police station after they found the body of 39-year-old Harish Kumar in a BMW.
Singh had driven around with the body in the car for few hours before he stopped at a police station car park last August.
Mr Kumar from Willenhall, had suffered a stab wound to the chest.
Singh, 41, of MacDonalds Close, Sandwell, had initially denied murdering Mr Kumar but later admitted manslaughter at Wolverhampton Crown Court and will be sentenced on June 29.
The prosecution accepted that Singh was suffering from paranoid schizophrenia at the time of the killing.
Wearing a red T-shirt, Singh, followed proceedings through a Punjabi interpreter and pleaded guilty to manslaughter by diminished responsibility.
Prosecutor Nigel Power QC told the judge medical experts had said: “The defendant’s psychotic beliefs contributed to and explained the killing.”
Judge Michael Challinor told Singh: “Following your plea you will be sentenced on June 29 and I am going to direct you are produced in good time that day for sentence.
“I have no doubt you will co-operate now you are being medicated.”
Paying tribute to Mr Kumar, his family said he was “a great, yet very humble man”.
In a statement issued through police, a relative said: “He was always there to help and he will be sadly missed – I just can’t believe that we’ve lost him.”