Owning a truck for your transportation business is essential. However, not everyone has the financial capacity to buy a truck outright. Many people choose to buy trucks on installment plans. So, if you are in the process of paying installments, can you pawn a truck you’re still paying off? This article will answer that question and provide you with the necessary information.
Truck Installment Plans and Ownership
When you buy a truck on an installment plan, you will sign a loan agreement with a bank or finance company. The bank will lend you a portion of the truck’s value, usually 70%, and you will pay the remaining 30% upfront.
However, it is important to note that you are not yet the full owner of the truck. Unlike buying a truck outright, the ownership of the truck on an installment plan belongs to the bank until you have paid off the entire principal and interest. Your truck will be registered as collateral at the bank. This means that the bank has the full right to handle the truck if you do not fulfill your debt repayment obligations.
Can You Pawn a Truck You’re Still Paying Off?
The answer is NO. You cannot pawn a truck that you are still paying off at pawnshops or other finance companies.
Since the truck is mortgaged at the bank, you do not have the right to dispose of this asset. Pawning a truck on an installment plan without permission is considered a breach of the loan agreement with the bank and may result in legal action. This action also violates Article 440 of the 2015 Civil Code regarding the obligation to pay in sales contracts.
Consequences of Pawning a Truck You’re Still Paying Off
If you intentionally pawn a truck that you are still paying off, you may face the following consequences:
- Being sued by the bank: The bank has the right to demand that you pay the entire remaining debt and may seize the truck to sell at auction.
- Being penalized for breach of contract: You will be subject to penalties as stipulated in the loan agreement.
- Affecting your creditworthiness: Violating the agreement will affect your credit history, making it difficult to borrow money in the future.
Solutions When Facing Financial Difficulties
If you are experiencing financial difficulties and need money urgently, contact the bank directly to find a solution. You may be considered for debt extension, repayment term adjustment, or other financial support.
Conclusion
Pawning a truck that is still being paid off is a violation of the law and the contract. Instead of looking for illegal solutions, actively work with the bank to find the best solution when facing financial difficulties. Complying with the law will help you avoid unnecessary risks and protect your rights.
