Is it necessary to mortgage the car key for an auto loan?
2 Answers
It is required to mortgage the green book (vehicle registration certificate) and the spare key. Conditions for bank auto loans without vehicle impoundment: The applicant must have ownership of the locally mortgaged vehicle, a stable income, a legitimate occupation, and the ability to repay; the motor vehicle registration certificate, driving license, purchase tax certificate, and car purchase invoice; insurance policy, vehicle and vessel tax, and relevant tax certificates for imported vehicles; ID card. Points to note during the mortgage period: During the mortgage period, the vehicle has a property claim right, meaning that if the debtor fails to repay the debt upon maturity, the creditor's mortgage right will be realized, and the vehicle will be used as collateral to settle the debt. Therefore, buying or selling a mortgaged vehicle carries significant risks. Legal basis for mortgaged vehicles: According to Article 394 of the Civil Code, which came into effect on January 1, 2021: To secure the performance of a debt, the debtor or a third party may mortgage the property to the creditor without transferring the possession of the property. If the debtor fails to perform the matured debt or the circumstances agreed upon by the parties for realizing the mortgage right occur, the creditor shall have the priority to be compensated with the property.
When I decided to buy a car, I specifically researched the auto loan process. I found that legitimate institutions like banks or auto finance companies don't require you to hand over your car keys at all. They use legal methods to secure the loan, such as placing a lien on the vehicle at the registration office. This means you can still drive the car normally in your daily life, with the keys remaining in your possession. This design is meant for consumer convenience. If you actually had to surrender the keys, commuting to work would become problematic - what a hassle! I also consulted a friend who confirmed that throughout his years of repayment, the keys always stayed with the car. The lender would only repossess the vehicle in case of default. The key is to sign a proper contract ensuring full transparency to avoid misunderstandings. In short, don't worry about the keys - just focus on making timely payments.
