Who is entitled to a car when two people sign a loan?

Two important documents to keep in mind for your car are loan papers and sovereign papers. The loan reflects the debt on the car and it may have multiple parties in the name. The title reflects ownership of the car and many parties can also be listed here. The names on the two documents don’t necessarily match. If you both borrow a car, the car still belongs to the person in the name of the sovereign.

Who Is Entitled to Have the Vehicle When Two People Are Signed on the Loan?
Who Is Entitled to Have the Vehicle When Two People Are Signed on the Loan?

General car loan

With a joint car loan, more than one person is responsible for repaying that car to the lender. For example, you and your spouse or parents may both be listed in a joint car loan. If the debt is not repaid, both parties will be held accountable for the consequences. However, the car loan does not reflect the actual ownership of the car.

Owning the same vehicle

Common ownership is determined by the name on the vehicle’s sovereign paper and the two names may be on the vehicle registration paper. When you purchase a car from a dealer, the parties wishing to be in your name must be present to sign the sovereignty paper. The sovereign paper will then be submitted to the Department of Motor Vehicles to the state where the owner lives, and only those listed on the sovereign paper have ownership of the vehicle under the law. Typically, a lender will be listed on the sovereign paper if the debt has not been paid, as the lender has the right to hold the vehicle while the debt remains unpaid.

Verification of car ownership

Check your title to verify who is entitled to a car. You should have a copy of your title in the profile and you can have the original.

Each state handles this process differently. Some states allow lenders to keep your ownership until you pay off the debt. In other states, lenders will provide documentation to you immediately. If you’re not sure who has your title, check with the DMV in your state. The DMV will have a record of your vehicle title as long as your vehicle is legally registered.

Transfer of car ownership

Maybe the two are listed on a car loan and on a sovereign note. In this case, it is unclear who owns the vehicle if there is a dispute. You can take this matter to court and the judge can seek to verify who actually paid, who used the vehicle as to the primary vehicle, and other factors. In the end, however, if the two parties are listed on the ownership paperwork, then both parties share ownership of the vehicle.

To remove one party from ownership, the individual will have to sign a transfer paper to the other party. In doing so, it is also advisable to remove this person’s name from the loan by refinancing the loan to a borrower.

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