Title

Meaning and Definition

Title, in the context of car finance, refers to legal ownership or the right of possession of a vehicle. It is a document that establishes the legal owner of the vehicle and contains relevant information, such as the vehicle identification details, owner's name, and any liens or encumbrances on the vehicle.

Why it is important to know

Understanding the title is crucial for car buyers and car finance borrowers as it validates the ownership of the vehicle. The title establishes the legal rights and responsibilities associated with the vehicle and provides assurance that the seller has the authority to transfer ownership. Lenders may require proof of title as part of the car finance application process to ensure the borrower has a valid ownership claim to the vehicle.

Example in car finance

When purchasing a vehicle using car finance, the lender typically holds the title as security for the loan until the borrower completes the repayment. Once the loan is fully repaid, the lender releases the title to the borrower, confirming their ownership of the vehicle. It is important for borrowers to ensure that the title is properly transferred and registered in their name to establish their legal ownership rights and protect their interests in the vehicle.