Legal analysis: it is illegal to cash out a car loan. For the purpose of illegal possession, the lender fabricates facts and conceals the truth to defraud a bona fide third party of money. If the amount is relatively large, cashing in constitutes a crime of fraud, which is an illegal and criminal act.

Legal basis: Article 667 of the Civil Law of People's Republic of China (PRC) is a loan contract in which the borrower borrows money from the lender, repays the loan at maturity and pays interest.