Who Owns the Wheels? Understanding Vehicle Titles on Financed Cars
Download MP3What Happens When a Vehicle is Financed?
- The vehicle owner (borrower/driver) is listed as the owner on the title.
- The lien holder (e.g., a bank or financing company) is recorded in a specific section of the title.
- Titles are typically held by the lien holder until the loan is fully paid off.
- How Does the Title Process Work?
- The DMV prints and mails the title to the lien holder, not the vehicle owner.
- The lien holder holds the title as collateral to ensure the loan is repaid.
- Owners cannot sell the vehicle while a lien is recorded.
- What Happens After the Loan is Paid Off?
- The lien holder signs and stamps the title as "Paid" and mails it to the owner.
- In some states, titles are electronic, and no paper certificate is issued unless requested.
- Electronic Titles (Paperless States):
- Titles are stored electronically by the DMV.
- Owners or lien holders can request a paper copy if needed.
- Upon loan payoff, the lien is electronically cleared from the DMV records.
- Leased Vehicles:
- Titles show the leasing company as the owner.
- The lessee (driver) is listed as the registrant for registration and licensing purposes.
- At the end of the lease, the vehicle's title is transferred to the lessee only if they opt to purchase it.
- Charge-Offs and Write-Offs:
- If a loan goes into default, lenders may "charge off" the loan, marking it as a loss on their financial records.
- A charge-off does not remove the lien from the title or DMV records.
- The lien holder remains listed on the title unless a lien release is issued.
- Key Takeaways:
- The lien ensures the financial institution has a security interest in the vehicle.
- Titles and liens are separate records but are interconnected in legal and financial terms.
- Understanding these details can help navigate vehicle ownership, financing, and selling processes.
Tune in to learn more about vehicle titles, liens, and how they impact your ownership!
