Can a Car Under Installment Plan Be Used for Loans?
2 Answers
A car under an installment plan cannot be used for loans because any vehicle that has been mortgaged belongs to the lending institution, and the owner only has the right to use it. Since the installment vehicle has not been fully paid off, the ownership has not yet been transferred to the individual, making it ineligible for further mortgaging. This is because the car under installment is already mortgaged to the bank, and until the mortgage is lifted, such a vehicle cannot be used to apply for a mortgage loan. Therefore, only after the borrower has fully repaid the car loan and completed the mortgage release procedures can the car be used as collateral to apply for a loan. The method for obtaining an auto-secured loan is through a secondary mortgage loan. A secondary mortgage loan utilizes the already repaid portion of the installment as collateral. When purchasing a car with a loan, the down payment is relatively large, and the loan proportion is small. After repaying for a certain period, the available loan amount increases, allowing for a secondary mortgage loan on the car through some lending companies.
When I bought my car before, it was financed with a loan. Now, the loan hasn't been fully repaid yet, and I want to use it to get another loan for some working capital. Actually, it's generally difficult to directly get a secured loan with a car that's still under mortgage because the car isn't entirely yours—the ownership still lies with the bank or the lending institution. Using it as collateral again increases the risk, so banks are definitely cautious. I also wanted to do this before, but after asking several financial institutions, they all said I needed to first pay off the remaining balance and provide a loan clearance certificate. If you really need money urgently, it's better to consider personal credit loans, credit card cash installments, or other forms of collateral—these processes are simpler and have faster approval times. Additionally, the remaining value of the vehicle also affects the outcome; for example, cars that depreciate quickly are harder to finance. Overall, don't take unnecessary risks—consulting local dealerships or professional advisors is a safer approach.
