A recent court ruling by the Provincial Court of A Coruña has declared a second-hand vehicle sale void, ruling that the transaction actually masked a high-interest predatory loan and an illegal seizure clause. According to legal analysis published by lawyer Carles Aranda Mata, the ruling targets predatory lending practices that exploit consumers facing urgent financial distress by using vehicle sales as collateral.
How Predatory Lenders Use Fake Car Sales to Trap Borrowers
Cash-strapped consumers frequently respond to advertisements offering rapid vehicle purchases and fast liquidity without formal bank approvals. In these transactions, the borrowing arrangement is structured as a dual-step contract. First, the company purchases the consumer’s vehicle for a fraction of its true market value. On the exact same day, the parties sign a secondary “option to buy” agreement that permits the original owner to keep driving the car while paying steep monthly fees.
In the A Coruña case reviewed by Aranda Mata, a consumer struggling with financial difficulties owned a van valued at 13.900 euros. Attracted by advertisements promising fast funding without guarantees, the owner signed a bill of sale transferring the vehicle for just 3.000 euros. The concurrent purchase option required the consumer to pay 305 euros monthly across two years, totaling 7.320 euros—more than double the principal amount advanced.
Legal Violations: Usury and the Prohibition of the Lex Commissoria
When the borrower fell behind on partial payments, the company seized the vehicle immediately outside of standard judicial foreclosure channels. The Provincial Court of A Coruña found that the operation lacked lawful cause, identifying the arrangement as a disguised loan carrying excessive, usurious interest rates.
Furthermore, the court ruled that the contract violated Article 1859 of the Spanish Civil Code. That statute explicitly forbids the pactum commissorium—a clause allowing a creditor to automatically appropriate or dispose of pledged collateral upon a debtor’s default. The court affirmed that creditors cannot seize assets held as security without following proper legal execution processes.
Court-Ordered Restitution and Consumer Protections
Upon declaring the contract null and void, the court ordered mutual restitution between the parties. Under the ruling:
- The consumer must return the initial 3.000 euro principal received, plus legal interest.
- The company must restore full ownership and possession of the vehicle to the consumer.
- The lending firm must cover all administrative costs to re-register the vehicle in the consumer’s name via the Directorate-General for Traffic (Dirección General de Tráfico).
- The company must hand over all vehicle documentation and refund 900 euros previously collected through monthly installments.
This judicial decision reinforces consumer protections against deceptive financial products that masquerade as ordinary commercial transactions to bypass lending regulations and interest rate caps.
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