Can a car still under mortgage be used for a secured loan?
2 Answers
No. Here is the relevant information: Auto Secured Loan: When applying for an auto secured loan, lending institutions have certain requirements for the car used as collateral. Therefore, if the car's mortgage loan has not been fully repaid, it cannot be used for a secured loan. Requirement for fully paid cars: Cars eligible for secured loans must be fully paid off. Even if the car was purchased through an auto mortgage loan, all outstanding payments on the auto mortgage must be cleared before the car can be used for a secured loan. Cars still under mortgage: Cars still under mortgage are inherently under collateral. A car that is already mortgaged cannot be used for another secured loan, so a car still under mortgage cannot be used for a secured loan.
I've been in this situation before, wanting to take out a mortgage loan using my car as collateral while it's still under installment payments, but found it impractical because the vehicle's title is still held by the original loan bank. Directly mortgaging it to another institution is risky, as they're concerned about priority rights. Unless you first pay off the remaining loan or find an institution that offers secondary mortgage services, but the interest rates are high—I've tried it and it's not cost-effective. I recommend exploring other options like unsecured personal loans for more safety and stability. Personally, I chose to wait until the mortgage was paid off before considering a mortgage to avoid worsening my debt. Financial planning should be forward-looking to avoid impulsive decisions that could lead to more trouble and losses. Remember, safety first—consulting a professional to assess feasibility is crucial.
