If you’ve ever financed a car, you may know what a lienholder is. It’s the bank, credit union or car dealership that loaned you the money to buy the vehicle. This information is important because the lienholder, legally speaking, has ownership of your car until you pay off the loan.
Let’s take a closer look at what a lienholder is and how it impacts you and your ownership of your car.
What is a lien and who is the holder?
If you buy a car and pay for it out of pocket, you won’t incur a lien on the vehicle. Most people don’t buy cars like that, however. Instead, the buyer may pay a down payment and the rest of the cost is fronted by a business or organization such as the car dealership.
Lien is the legal word used to describe the right this person or business has to your property while the loan is active. Lienholder describes their relationship to you. The lien says…