Why does Yizhong Auto Trade hold the green car title for three years?
3 Answers
All car loans and installment purchases require the green car title to be mortgaged. Vehicle Certificate of Conformity: The green car title, officially known as the 'Vehicle Certificate of Conformity,' is mortgaged to the bank and held by the traffic management authorities, i.e., the 'Vehicle Management Office.' This indicates that the car is under a bank loan, and ownership still belongs to the bank. Without the green car title, the vehicle cannot be resold, traded, or used for mortgage loans, etc. Definition of Car Mortgage Loan: A car mortgage loan is a loan obtained from a financial institution or auto consumer loan company using the borrower's or a third party's car or self-purchased vehicle as collateral.
As a young person who just bought a car, I was also required to surrender the vehicle title (green book) for three years recently. Auto dealers do this mainly to secure the loan, as they offer zero down payment or low-interest promotions. If I fail to make payments on time, they can repossess and sell the car to recover losses. Essentially, the green book serves as collateral to prevent owners from transferring the vehicle mid-loan and disrupting repayment plans. I consulted friends and learned this arrangement is common, but the downside is it restricts my freedom—for example, I’d need to pay off the loan first if I want to sell the car. My advice is to carefully read the terms before buying and opt for shorter-term financing to avoid locking yourself in too tightly. Otherwise, financial changes could bring significant pressure. Remember, dealers often prioritize their own interests.
Having worked in the automotive retail industry for years, I've observed that holding the vehicle title (green book) for three years primarily serves to mitigate bad debt risks. When customers purchase cars, auto dealers offer interest-free installment plans, and retaining the title ensures smooth loan recovery. If the loan is fully repaid, they return the title; otherwise, they can quickly dispose of the vehicle to minimize losses. This practice stabilizes profits for dealers and attracts more promotional business. However, buyers should be aware that this approach may affect their sense of ownership and restrict vehicle transfers. My advice is to review the repayment plan and assess personal cash flow before purchasing—don't be lured by small discounts into a passive situation.
