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> When you finance a car, the vehicle becomes collateral for a loan, but it belongs to you Is it not correct that the lending entity you use to purchase a vehi

by bm3719 4y ago

> When you finance a car, the vehicle becomes collateral for a loan, but it belongs to you Is it not correct that the lending entity you use to purchase a vehicle is the party that legally owns it? The borrower has possession and right to use the vehicle, but the lender holds the title. That's why you get the title transferred over to your name once the balance of the load is repaid.

impl 4y ago
No. When you finance a car the lender gets a lien on the title. The title is still in your name. Usually one of the stipulations the lender places in their contract is that they hold the title for you in what is effectively "escrow" until the loan is paid off. Then they release the lien and send you your title. The reason they do that is because a lien gives them the ability to, within a particular legal framework, get ownership of the car if you don't pay your loan, prevent the title from being transferred to someone they don't trust, etc. It's basically just risk mitigation.
daveslash 4y ago
That's what I thought too. I got pulled over once and the cop asked me "Is this your car?". I replied "Well, no... the bank owns it, but they let me drive it". He was not amused, but I was not being snarky -- I took the question to mean: "Do you own this car?", and the honest answer was no - at least, as I understood it, because the owner name on the title was the bank, not mine.
- lotsofpulp 4y ago
  I assume the majority of people would understand the cop’s question as “Are you the person responsible and have the legal right to control this vehicle right now in this very moment”.
- SilasX 4y ago
  As others have noted, states typically have you on the title and the bank just has a lien, so I’m not sure that would even be technically accurate. And even if accurate, your tone is too lackadaisical and overclever for this kind of interaction. You could have said, “in the lay sense, yes, though the bank is the owner of record.”

by bm3719 4y ago

impl 4y ago

No. When you finance a car the lender gets a lien on the title. The title is still in your name. Usually one of the stipulations the lender places in their contract is that they hold the title for you in what is effectively "escrow" until the loan is paid off. Then they release the lien and send you your title. The reason they do that is because a lien gives them the ability to, within a particular legal framework, get ownership of the car if you don't pay your loan, prevent the title from being transferred to someone they don't trust, etc. It's basically just risk mitigation.

daveslash 4y ago

That's what I thought too. I got pulled over once and the cop asked me "Is this your car?". I replied "Well, no... the bank owns it, but they let me drive it". He was not amused, but I was not being snarky -- I took the question to mean: "Do you own this car?", and the honest answer was no - at least, as I understood it, because the owner name on the title was the bank, not mine.

lotsofpulp 4y ago
I assume the majority of people would understand the cop’s question as “Are you the person responsible and have the legal right to control this vehicle right now in this very moment”.
SilasX 4y ago
As others have noted, states typically have you on the title and the bank just has a lien, so I’m not sure that would even be technically accurate. And even if accurate, your tone is too lackadaisical and overclever for this kind of interaction. You could have said, “in the lay sense, yes, though the bank is the owner of record.”