The loan signer designates who will own the car upon full payment of the auto loan. The buyer determines ownership based on whose name he lists on the title. In most instances, the loan signer is buying the vehicle for his own use and lists only his own name. In some cases, though, a buyer intends to designate another individual as the owner or co-owner of the vehicle. The loan signer reserves the right to name anyone as the owner of the vehicle, but that individual must sign the title, too. The actual title, though, remains in the possession of the lienholder, or finance company, until the loan is paid in full. Only after full payment does the lienholder release the lien, and the title then goes to the person listed on the title.
A co-signer signs a loan when the primary signer lacks the credit history to obtain an auto loan on his own. The co-signer gains rights under this agreement, and that includes the right to refuse to sign a loan unless he reaches an agreement with the primary signer as to whose name appears on the title. The co-signer may request that his name appear on the title in addition to the buyer's name or a third party's name.
Once the title has been established and the lender takes possession of the auto title, the title cannot be changed until the loan is paid in full or the lender decides to sign over the title for another reason. A name cannot be removed from the title and a name cannot be added to the title. An individual can refinance the vehicle and purchase it from the other title holder. This process takes place in some divorce settlements. When this happens, the title can be changed to reflect the new owner of the vehicle.
The person listed on the registration for a vehicle typically is the same person listed on the title. In some cases, though, the vehicle is registered to the person who normally drives the vehicle and takes responsibility for it. This might not be the person listed on the title. If a person buys a vehicle and registers it, that person is liable in the event of a collision even if the person's name does not appear on the title. Therefore, it is best for the buyer to allow the titled owner to register the vehicle.