Can a Car Still Under Installment Loan Be Used as Collateral for Another Loan?

[DelEthan]

A car under an installment loan cannot be used as collateral for another loan until the existing loan is fully repaid. Relevant information: Specific reasons: Because the ownership of any mortgaged vehicle belongs to the lending institution, and the car owner only has the right to use it. Since the installment vehicle has not yet been fully repaid, the ownership does not yet belong to the individual, so it cannot be mortgaged. Legal basis: Article 33 of the "Guaranty Law": The term 'mortgage' as used in this Law refers to the act where the debtor or a third party, without transferring the possession of the property listed in Article 34 of this Law, uses such property as security for the claim. If the debtor fails to perform the obligation, the creditor shall have the right to be paid with priority from the proceeds of the discounted price, auction, or sale of the said property in accordance with the provisions of this Law. The debtor or the third party specified in the preceding paragraph is the mortgagor, the creditor is the mortgagee, and the property provided as security is the mortgaged property.