Can a Car Still Under Loan Be Used as Collateral for Another Loan?
1 Answers
No, here are the detailed explanations: Introduction: If the car loan is not fully paid off, you cannot sell the car or use it as collateral. After taking out the loan, the vehicle's title is already pledged as collateral, and during this period, selling or transferring ownership is prohibited. Note: When applying for an auto loan, a lien is placed on the vehicle's title. This means the lender holds the ownership rights, while the borrower only has the right to use the vehicle. Selling the car at this stage would not allow for the transfer of ownership. Only after the loan is fully repaid and the lien is removed can the car be used as collateral for another loan. Solution: Use a bridge loan to sell the car. You can first apply for a new loan from a legitimate financial institution to pay off the existing auto loan in full.