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People do this for teens all the time.
Yes, the car is titled in your name and yes, you are still the owner, which of course is why your child falls under your insurance coverage.
But if this is not a teen/college student driver, I wouldn't do this for the already-mentioned reasons.
Yes absolutely. The car goes in their name for liability reasons insurance and registration. You simply get as the lienholder get paid first before they get any insurance money or if they don't pay you can repo or they have to pay you before getting a owner slip. You can also condition the borrower to carry full coverage insurance against total loss
You do not want the liability as a registered owner or co owner. You do not need to be a financing company to be a lienholder
Personally I wouldn't do it. If their credit is bad that they can't get a loan the conventional way you're most likely gonna have a issue getting paid. Let it be their problem.
Serious question; how does an individual get on the title as the lienholder?
Serious question; how does an individual get on the title as the lienholder?
When the title is transferred to the new owner, there is a place on the back of the title for you to be listed as the lienholder. When the transaction takes place, make SURE that the info is entered.
Also, be aware (though there are some good responses here) that the specifics of title transfers and lien recordings are state-specific. For example, in about 40 states, the title will go to the lienholder. In most of the rest, the title goes to the owner--even if there is a lien on the vehicle (the lien is physically recorded on the title). (Then, there's a couple of oddball states with some hybridization of the two). Not sure why any state would do it that way...
If it were me, I'd be a lienholder before simply putting my name on the ownership/registration and letting another drive. Depending on the insurance laws on the books in your state, you could be opening yourself up for liability, suspension of your license, additional fees, etc...if you're counting on the other person to pay the insurance bill. Not to mention more $$ on your part.
My son sold a Jeep to a friend who didn't have enough money to pay cash, and didn't want to get a loan. My son agreed to accept payments on the Jeep, and listed himself on the title as a lien holder. It was a simple matter of entering his name and address in the spaces provided on the back of the title. No other paperwork was required. Apparently the state DMV does not care what agreements, verbal or written, have been made between the parties. All they are interested in is registering the lien, and it is up to the lien holder to decide when to release the lien, using the form provided by the DMV.
I just checked one of my Montana titles, and there are TWO spaces on the back to register a "security interest" (officialese for "lien")!
Serious question; how does an individual get on the title as the lienholder?
You either get the registered owner to give you power of attorney to register the vehicle for him and when you do there is a section for lienholder you fill out on the registration paperwork. Or you both go to DMV/AAA and you simply add yourself as thenlienholder and give the needed info on the registration forms.
It's really pretty simple.
As lienholders you have specific rights that you can enforce for that vehicle.
Last edited by Electrician4you; 03-26-2015 at 09:21 AM..
No other paperwork was required. Apparently the state DMV does not care what agreements, verbal or written, have been made between the parties.
I don't know the OP's relationship with the individual, but if there is a risk that they would try to sell it (which he alluded to) then I would certainly have a signed contract on public record stating the terms of the lien. Otherwise, you have opened yourself up to headaches. The registered owner could contest that the lien has been satisfied, the lienholder would contest otherwise. Registered owner may end up with the vehicle due to lack of a contract.
It is true that having everything clear and in writing is an excellent idea, but it is also true that the State DMV doesn't really care.
It is also true that having the contract recorded at the County Courthouse (Clerk and Recorder's Office) is a good idea, but it isn't legally required. Where else could the contract be made part of the "public record"?
County Courthouse (Clerk and Recorder's Office) is a good idea, but it isn't legally required. Where else could the contract be made part of the "public record"?
Nowhere I am aware of...
Considering the OP has a level of doubt great enough to cause him to pursue placing security interest on the vehicle; without subsequent efforts to legally secure the lien, I don't see a point in doing it at all.
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