Do you really need to open a mortgage by mortgaging your car?
Our system provides for the possibility of being able to register mortgages on both real estate and movables, provided they are traceable to their owner, thanks to the registration or registration in special registers attesting to their ownership.
The car thanks to the registration to Pra is part of the movable assets that have the characteristics necessary to be subject to a “guarantee” through the registration of a mortgage. Having said that, in practice, there are no mortgages on the car by major banks or financial institutions, and the reasons are many.
How does the mortgage loan on the car work?
The operation is similar to the mortgage loan, in the sense that it is necessary to refer to a notary who proceeds to register the mortgage to the Pra (in this way the car cannot be sold and in the event that the beneficiary of the mortgage would like to exercise the right of enforcement can do it without difficulty).
At the end of the loan, to “free” the car from the mortgage, it will be necessary again to contact the notary to cancel it. The operation of the loan for the rest is similar above all to the loan repaid.
Is it worth the mortgage loan on the car?
This is a type of financing that, apart from the difficulties encountered in obtaining it, is not worthwhile even from an economic point of view. First of all it is very difficult to obtain, due to the rapid loss of value that used cars have (the subject changes partially for classic cars, but however it would be more appropriate for a loan on pledge than for a mortgage).
Furthermore, it is a “hybrid” situation compared to other forms of loan, with considerably higher costs, especially due to the need to contact a notary.
Finally, there is the question of the use of the car, which by law would be possible (since the mortgage does not cause loss of ownership and free use of the asset on which it was registered), but is actually suspended. This is because logically in use there are high chances that the car will be damaged, thus losing the value established at the time of signing the loan.
Finally, the value of the car undergoes a further sharp devaluation in the estimation phase, not allowing to monetize the forecasts on official valuations, but applying to these strong discounts (with a percentage less up to 70%).
The mortgage on the car loan is better pawned.
Access to the pledged loan depends in the specific case on the type of car and its value, but the costs linked to the financing are considerably lower for the former (included in the TAEG) and, as mentioned, in both cases the actual loss is possibility of being able to use your own car.