Can a Car Be Sold After Being Mortgaged?
2 Answers
After a car is mortgaged, it can be bought and sold, but the ownership cannot be transferred. Chinese law clearly stipulates that mortgaged cars can be traded, but the transfer of ownership is not allowed. The reason a mortgaged car cannot have its ownership transferred is that the car has already been mortgaged, and the property rights temporarily do not belong to the owner. Therefore, the owner does not have the right to transfer the ownership of a car that temporarily does not belong to them to someone else. Thus, purchasing a mortgaged car does not grant ownership rights, only the right to use. Only after the mortgage is fully repaid and the mortgage is lifted can the transfer of ownership be processed. The term 'mortgage' refers to a situation where a debtor or a third party does not transfer the possession of the property listed herein, but uses the property as collateral for a debt. If the debtor fails to fulfill the debt, the creditor has the right to prioritize repayment by either converting the property into money or through auction or sale of the property, as stipulated by law. The debtor or third party mentioned in the preceding paragraph is the mortgagor, the creditor is the mortgagee, the property provided as collateral is the mortgaged property, along with interest, penalty fees, compensation for damages, and the costs of enforcing the mortgage. If the mortgage contract stipulates otherwise, those terms shall prevail.
Let me tell you, once a car is mortgaged to a bank or other institution, it cannot be sold casually. They have priority rights over the vehicle. If you sell it without repaying the loan, the buyer won’t get a clean title, and the transaction might be invalid. Legally, this is designed to protect creditors. If you conduct a private sale and the buyer finds out the mortgage hasn’t been lifted, it could lead to disputes or even lawsuits for breach of contract. There are only two solutions: first, gather the money to pay off the remaining loan and reclaim the title; second, negotiate with the lender to allow the sale and use the proceeds to settle the debt. This process is quite troublesome, but it must be done through proper channels to avoid endless troubles. I recommend checking the mortgage status before selling the car—don’t chase quick money at the risk of major losses.
