I recall buying a used car where the bank lien had to be removed prior to transfer.
P.S. Looking around a bit there is a lot of variation on how this works depending on locale. So I guess lease vs. finance is just another way things can differ out there.
No doubt it would be fascinating to see how each state does it. I only have experience with a few.
You are the owner, they simply have a lien on the vehicle which is noted on the title. Once you pay off the loan, they send you information to get the lien removed and a clean title.
Car loans are secured on a car. If you want to just borrow money with no security you can get a (likely far more expensive) unsecured loan if the bank judges this to be a good risk, or take an overdraft on a current account or use a credit card, all unsecured debt.
No, the listed owner on the title is the owner, no matter who has possession of the title.
Bottom line, the government just makes it obscure and difficult to determine the real dynamics between the two parties, and the weird interaction it may have with existing laws governing theft/ownership.
Some states in the US also handle mortgages like this.
Source: Trying to get a bank to remove the lien after it’s fully paid off can be a real source of frustration.
The way all of this works varies by state though. Some states issue a title electronically when the lien is released.
Kinda nice when you trade in a car you still owe a bit of money on, as you don't really need to bring anything with you other than the key and your drivers license; the dealer does all the work getting it cleared and transferred.
I guess it's different mostly in name though, they still have strong rights to the vehicle.
Many people are surprised by this. They assume repossession means the loan is paid off - until they discover they've lost their car and are still on the hook for more or less the current market value.
In general:
Lease - Finance company owns the asset, you are obliged to service the payments. You may have an option to transfer title at the end of the period (depending on jurisdiction).
Loan - You own the asset, secured against the asset.
(There are some UK/US-specfic product types due to difference in things like tax law)
Leasing (in general) is popular as it has tax-advantages for smaller businesses/individuals around depreciation, which can lead to good pricing for end lessee.
(source: Made software for the asset finance industry for a decade or so in the UK/EU + US)
This is the law. It is working as intended. It's also moral - If you enter into a contract to buy something on credit, you should uphold your end of the contract. Specific instances have been wrong, and we can argue the merits of this particular case, but car manufacturers assisting the new owners of assets that have been repossessed in securing their asset is at worst morally neutral.
1. Unsecured loan - if you have the credit facility available then you can borrow an unsecured amount of money and purchase a car. Neither the seller nor the bank have any ownership interest in the car. The loan isn't secured on the car. You are free to sell the car on and transfer its title to anyone else. If you default on the loan then different proceedings may take place to recover the money owed, but that may not necessarily include re-possessing the car (if it's valued under GBP3000.00). The loan company can come after any of your assets.
2. Hire Purchase - the seller lends you through a credit company the price of the car (and interest). The seller transfers the title of the to the credit company. You do not become the "owner" of the car, instead you rent it until such time the total amount of the loan is paid off. You don't have any right to sell or transfer ownership of the car. If you do the unfortunate buyer of the car may wake up one morning to find that it's been repossessed. This is why as a buyer performing HPI checks for any outstanding hire purchase or secured loans on the car are fairly important.
There are also other schemes such as leasing which make it more obvious that if you don't keep up with the payments then the seller or finance company can come along and repossess the car.
In those states, you have the title and the bank has a lien on the title.
As advocates, companies are fickle and unreliable.
Presenting as advocates, companies always stress how aligned their interests are with customers'. We'll, that's true until it isn't. Once it isn't, it flips.
That's useless. Better to keep in mind that companies aren't your advocates. They're your salesman.
A Google, FB or Tesla just isn't structurally built for that.