Auto Title Question from Ed
Hello everybody. I hope everyone is keeping up on all the recent automotive news, I know I am. We received a question from Ed regarding how best to title a vehicle that is purchased on behalf of a friend or relative. The question and situation was this – “I want to buy a car for my niece. She will pay me back. How can she license it and register it in her name, but I can keep the title until she pays me back?”
The answer to an extent depends on the state you live in. Basically, there are two types of states, those in which the registered owner holds the title and ones in which the financial institution holds the title. If you find yourself in the position to assist someone close to you with the purchase of a new or used vehicle, but want to maintain the security of the loan, you must list yourself as the lien holder. Every state has their own process or form for this, but many include a section on the back of the title itself that allows you to add the lien holder information. Once this is signed by both parties and the vehicle is registered, the person providing the loan will be the senior creditor on the vehicle. This would allow repossession of the vehicle for any reason provided the states due process requirements are met. I would definitely check with your friendly neighborhood attorney before attempting repossession. And never confront anybody directly about these matters, you never know what may be said or done.
So the answer to the question is simply to make sure you are listed as the lien holder on the title and you will be all set. Remember that at the time that the debt is satisfied the lien must be released, which requires a little additional paperwork. Another recommendation I would make is to be sure to have directions in your estate for resolution of this in case something happens to you before the debt is satisfied. Better safe then sorry.
