Is a Vehicle Pledged or Mortgaged, and What's the Difference Between the Two?

[MarleyAnn]

Vehicles can be both pledged and mortgaged. The differences between vehicle pledge and mortgage: The biggest difference between vehicle mortgage and pledge lies in whether possession is transferred and whether registration is required. For example, banks typically use vehicle mortgages for new car purchase consumer loans. When customers face financial constraints in purchasing a new car, they can secure funds through bank loans to buy the vehicle without affecting its use. If the customer is raising funds not for purchasing a new car but using the vehicle as collateral, in private lending scenarios, lending institutions may prefer vehicle pledges to simplify procedures and facilitate quick liquidity. Vehicle Pledge: Article 208 of the "Property Law" states: To secure the performance of a debt, the debtor or a third party may pledge movable property to the creditor for possession. If the debtor fails to perform the due debt or the circumstances for realizing the pledge right as agreed by the parties occur, the creditor has the right to seek priority compensation for the movable property.