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
    Commented Aug 27, 2016 at 16:43

2 Answers 2


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.

  • 1
    Can you point to a statutes or case law to support this claim, or is this just a personal opinion? Not the fact that the lender has a lien, but that you can't sell parts from the car.
    – user6726
    Commented Aug 28, 2016 at 14:35
  • It's a fundamental principle of securitization. Here's a case discussing something very similar to OP's question: bankruptcykansas.info/wp-content/uploads/2010/01/…. Commented Aug 28, 2016 at 14:40
  • And here's another case discussing same: hklaw.com/publications/… Commented Aug 28, 2016 at 14:42
  • An exception to that general intuition, which is good, is that if a part is replaced with a new (or remanufactured) one, the old part can be sold. For example, on an AWD car you need to replace the front tires at the same time, or the rear tires at the same time, or all tires at the same time, even if only one is defective (e.g. it was slashed by a vandal on only one side), to get even tread and balance. You replace all the tires. You can sell the three perfectly good ones free of the lien and without breaching the loan agreement.
    – ohwilleke
    Commented Feb 20, 2020 at 4:39
  • Your exact rights, by the way, in this situation are governed by Article 9 of the Uniform Commercial Code as codified in the state in question (e.g. Colorado Revised Statutes § 4-9-101 et seq.), together with the language of the note and security agreement. In theory, the issue might be resolved in a manner different from the default rules, in the language of the security agreement.
    – ohwilleke
    Commented Feb 20, 2020 at 4:41

Late reply, but tired of always seeing the same false answers. And Daniel’s examples aren’t accurate because it doesn’t have anything to do with your question. In reality it’s just the bank suing the owner, there’s no laws broken. It’s just the bank suing to get their money they’re owed because the collateral doesn’t have much value after an accident. So examples really just reinforce that it’s not illegal, just that the bank can sue for the difference owed when they auction the car. End of the day, you own the car. Simply the car is collateral to secure the loan they gave you to buy the car. But you still own the car. Same reason why if you default they can’t go after you for theft. They can repo the car by law, but are super limited even in that respect. I.e. they can’t enter private property to retrieve the vehicle. They really can only sue you for what you owe them if they can’t recover the car. You cannot be charged with theft. So while it may be immoral, it’s not illegal. All these people saying it’s illegal are confusing morality with legality. If they can track down certain parts, they may have claim to recover those parts. But that’s about it. Again, can’t charge anyone with theft or a crime. Most of the time the cost of recovery is more than the value of the car or parts so they simply sue you or charge it off. People really need to stop stating things that is their moral opinion as if it’s law or fact.


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