If you finance a car through a bank the bank owns the car, they have the title (US).

No (or rather, I have never seen this where I live in the US), they have a lien on the title. You still have the title.

Source: Trying to get a bank to remove the lien after it’s fully paid off can be a real source of frustration.

You will be listed as the owner on the title but it is not uncommon for the bank to physically hold the title.

The way all of this works varies by state though. Some states issue a title electronically when the lien is released.

That varies by state. Where I live, the financing institution with the lien keeps the title until it is paid off.

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.

In nine states, this is not the case. The buyer has possession of the title (or electronic), and the bank has a lien on the vehicle.

My credit union has a lien on my car. The title is in my name.

I guess it's different mostly in name though, they still have strong rights to the vehicle.

Only if it’s a lease, if you have a standard loan YOU are the titled owner and the bank is a lien holder on the title.

Isn't it reversed: that the repossession takes place because the legal title to the vehicle changed, due to the contract being broken by lack of payment?

Correct. I meant when the repossession order is issued.

This isn't how it works in the US. In the US, the car is titled to the bank until the loan is paid in full, then the bank transfers the title to you.

That isn’t correct. The car is titled to you, the bank is added as a lien holder in a separate part of the title. Happy to show proof if desired.

If the car was titled to the bank, they would have to be involved and would be listed in the registration process with the state getting plates, etc.

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.

Is that state specific? I recall some banks holding liens against titles instead?

I recall buying a used car where the bank lien had to be removed prior to transfer.

It could be we're not distinguishing lease vs. finance in these threads. In my experience in Massachusetts, lease titles were in a holding company's name, while financed vehicles were in my own.

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.

I wouldn’t be surprised it varies a lot. Just vehicle registration varies. In California the plate stays with the car, but in other states new plates are issue and old plates move to the original owners new car.

No doubt it would be fascinating to see how each state does it. I only have experience with a few.

Ah, my apologies. I'm a Brit.

The finance company becomes the owner once payments stop. Telsa is therefore helping the legal owner of the car. I don't have a problem with this.

It's not universal. Some places have specific regulations that govern this and so they specifically carve out a weird "ownership but non-ownership" scenario. E.g. mortgages here in South Africa. Other places yes it's in your name but you put it up as collateral on the loan itself, etc etc etc.

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.

“"ownership but non-ownership" scenario. E.g. mortgages here in South Africa.”

Some states in the US also handle mortgages like this.

You don't own the vehicle if you have a loan, the bank has the title. The title holder is the owner. The best part about paying off a financed car, to me anyway, is the day the title shows up in the mail and you actually own your car.

> You don't own the vehicle if you have a loan, the bank has the title. The title holder is the owner.

No, the listed owner on the title is the owner, no matter who has possession of the title.

"Loan" sounds so generic to me that what you're saying may or may not be true in different places.

I'm sure that somewhere has crazy rules but the general idea of a secured loan is the lender can easily take your security if you don't pay the debt. If not for that it isn't secured, is it?

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.

Collaterals don't require ownership by bank where I live. Loaned cars are owned by their loaners (but leased cars aren't, although they may transfer ownership to the leaser after a period of time, depending on the terms of the lease). Not sure how these things work in the UK, though.