For many people in the United States a car isn't a luxury, it's a necessity. But, not everyone has the money to buy a car on their own and may need a little help from family or friends. In this instance, you may buy a car for someone as a gift or purchase the vehicle for them under a loan agreement. When you do this, you must be careful about whose name remains on the title. If you put the car entirely in someone else's name, you could be forfeiting any rights of car ownership that you may have.
Purpose of the Title
Having a car in someone else's name means that they are listed on the title. The purpose of a title, whether for an automobile or other property like a home, is to show ownership. This means that if you've purchased a car for someone else and placed only his name on the title, he has rights to the car and is therefore the legal owner of the vehicle, not you.
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Borrowed Funds and Titles
If a person borrows money from you and uses it to buy the car, ideally, your name should be on the title as a lienholder. If you do this, you assert your right to reclaim the vehicle in the event that the person who borrowed from you doesn't repay the auto loan.
You would not have a right to the vehicle as long as the borrower is making consistent payments, and even if the borrower were to default, you would need to go through the courts and prove they owed you the debt through due process. You cannot simply seize the car even though you are the person who essentially has paid for the car.
Transfer of Title
If your name is not on the title for the vehicle, you may be able to convince the owner to transfer the title to you, depending on the circumstances. The person on the title does not have to agree to this, but short of suing, this is the only way to get the vehicle back. Typically, to transfer the title, the person on the title must complete a transfer of title application and sign the title to show he's authorized the transfer.
Read More: The Laws on Co-Signing for an Auto Loan
The Bottom Line
If you are on the title in any way, either as a lienholder or co-owner, you have a right to at least some of what the car is worth. However, the fact that someone else is on the title means that even though you paid for the car, you can't legally sell it without the consent of the other person on the title. You do not have a right to the car if you aren't on the title.