Is it possible to dismantle a car and sell the parts even though the car is still on a loan in Illinois or any state?

My thinking is that the car is still owned by the bank that the loan is through. Can I do whatever I want because the car is in my possession?

  • The bank does not own the car. It has a lien on the car. – phoog Aug 27 '16 at 16:43

No, because you are affecting the car's value by selling its parts. The car is collateral to the loan, so if you don't make the payments, the lender has the right to repossess and resell it to recoup their money. If they are unable to recover at least the outstanding balance of the loan through resale, you will be on the hook for the difference. This is called a "deficiency balance".

Simply having possession of something isn't adequate basis to decide you can do whatever you want with it. You have physical possession, but the lender is the first lien holder on the title until the loan is satisfied.

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