Where do sellers of mortgaged cars source their vehicles?
2 Answers
Sellers of mortgaged cars source their vehicles from banks, financial companies, and pawnshops. Bank internal bidding auctions: When a car owner purchases a vehicle through installment payments, they use the car as collateral to obtain a loan from the bank. During this period, the vehicle's green book (title) is held by the bank, and the car cannot be transferred until the loan is fully repaid. When checking the vehicle records, it will show: Mortgaged to XX Bank. If the owner fails to repay the loan on time, the bank faces bad debt. To recover these losses within the year, the bank may sue the owner in court or use a third party to repossess the vehicle for internal bidding auctions. The prices of these mortgaged cars are similar to used car prices, and purchasing them is not recommended. Financial company auctions: Auto title loans use the borrower's or a third party's car or self-purchased vehicle as collateral to obtain loans from financial institutions. When checking the vehicle records, it will show: Mortgaged to XX Auto Finance Company. If the owner defaults on the car loan, the financial company may sue or use a third-party repossession team to take back the vehicle, which is then auctioned internally through bidding. Pawnshop mortgages: When car owners urgently need funds but cannot obtain loans from banks or financial institutions due to certain reasons, they may use their vehicles as collateral to borrow money from private enterprises or individuals, signing a mortgage contract. If they cannot redeem the vehicle by the due date, it is sold through debt transfer.
As someone who has been in the car market for years, let me tell you, there are plenty of sources for selling mortgaged vehicles. Most dealerships acquire cars directly from financial institutions, such as banks or small loan companies, when owners default on their loans—the cars are then repossessed and auctioned. I’ve also seen many people hunting for bargains at court-ordered vehicle auctions, which are legitimate channels offering affordable prices but with fierce competition. Private channels are common too; some involve transfers through debt collection agencies or owners urgently looking to sell. However, buying such cars carries high risks—if the vehicle has unresolved paperwork, it could spell big trouble. I recommend checking the vehicle’s records first to ensure there are no hidden debts. When browsing the used car market, chatting more with people can reveal insider tips—sources are wide, but caution is key.
