A lienholder is a lender that has a legal claim to your property until you pay it off in full. The term is commonly used in the context of car loans, where the lienholder is the party that holds a lien on your car until your loan is paid in full. The lienholder can be a bank, financial institution, or private individual. When you borrow money for a car, its common for your lienholder to keep the title, which is the legal ownership document for your car. The lienholders name may also be printed on the car title, as legal reassurance that you cant sell the car until its paid off. Once the loan is paid, the lienholder releases the lien and signs the title over to you.

Lienholders can require you to purchase certain car insurance coverages to help protect their investment if its damaged or destroyed. If you finance your vehicle, you will typically need to have certain coverages included in your car insurance policy. Comprehensive coverage and collision coverage are the two most likely types of insurance your lienholder may require. In most cases, a lienholder will also require you to have full coverage car insurance on the financed vehicle. If you don’t comply with the lienholder’s insurance requirements, the lienholder could charge you more to cover the gaps in your insurance coverage.

In summary, a lienholder is a lender that has a legal claim to your property until you pay it off in full, and is commonly used in the context of car loans. The lienholder can be a bank, financial institution, or private individual. Lienholders can require you to purchase certain car insurance coverages to help protect their investment if its damaged or destroyed.