Can a car still under mortgage be used as collateral for a loan?
2 Answers
A car still under mortgage cannot be used as collateral for a loan because the ownership of the mortgaged car does not yet belong to the owner. Only after the mortgage payments are fully settled and the vehicle's green book (registration certificate) and other documents are obtained can the car be used for a collateral loan. Below is relevant information about car loans: Definition: A car loan refers to a loan issued by a lender to a borrower applying to purchase a car. Auto consumer loans are a new type of loan where banks provide RMB-guaranteed loans to car buyers purchasing vehicles from their authorized dealers. Loan Term: Auto consumer loans typically have a term of 1-3 years, with a maximum of 5 years. For used car loans, the loan term (including extensions) must not exceed 3 years, while dealer car loans must not exceed 1 year.
I often encounter this issue. When your car still has an outstanding mortgage, simply put, the auto loan company has a priority claim on your vehicle, and they won't easily allow you to use it as collateral for another loan. If a new lender agrees to this arrangement, the risks are substantial—if you can't manage the repayment, they might not recover their money. I recommend starting by paying off your existing loan first, or exploring unsecured options like credit loans or personal loans that don't involve assets—this is a safer approach. I've seen friends try this, only to get rejected and damage their credit score. If you're serious about it, it's best to consult with a legitimate financial institution, assess your income situation, and then make a decision—don't act impulsively.