Americans have reached $1.56 trillion in outstanding auto debt just this past August as over 100 million nationwide have a car loan. Car financing means these 100 million Americans have a lien holder in the form of a bank, the financial arm of an automaker, or a credit union.
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17% of new vehicle owners pay over $1,000 for their monthly car payment according to Edmunds
Who or what is a lien holder on your car
A lien holder can even be a private party like a friend, family member, or business partner. Currently, monthly car payments for a new vehicle in the U.S. is at $725 on average, according to Experian while a used vehicle goes for about $516 a month. In Connecticut specifically, the average car payment per month on an auto loan is $527, while for a used one it’s $329. That explains a lot of the auto debt.
For anyone with a car loan, there’s a lien in place on their vehicle and it’s noted on the car title. The legal document ensures that the institution (your lien holder) you got your loan from gets full payment for the car. The lien holder owns your car while you pay it off. The lien also authorizes your lien holder (bank, and so on) to repossess your vehicle in case payments aren’t made regularly as per loan agreement.
In 2004, only 1% of auto loans lasted six to seven years; now those long-term loans are 30% of the market reports CNN Business
The lien holder decides
By the same token, the lien allows your lien holder to make all sorts of decisions regarding the car you’re financing like the type of insurance coverage you must have when you register the vehicle. The lien holder wants to protect their property, so if your car gets into an accident or stolen, they have ample recourse and can recover their investment.
From assigned car title to title transfer
When you finished paying for your car loan in Connecticut, the Constitution State requires your lien holder to automatically sign over the car title to you and will mail you the (new-ish) certificate of title. Then, you can take your Connecticut car title and apply for a title transfer in your name and become the (new) owner. You may (also) need a lien release letter from your lien holder, depending on the company or DMV branch where you’re applying for a title transfer. Some need “proof” you’ve paid off your vehicle in full. But no worries, your lien holder is used to the process and will send the lien satisfaction letter asap.
The average 5-year auto loan rates for $25,000 in Connecticut is 7.34% as of late September 2023, according to ICanBuy online
Connecticut transfer title online
If you want to bypass DMV and tag agencies appointments, wait time, lining up, the apply for a Connecticut title transfer online with eTags. Just a few questions to answer, while you’re on your lunch break at a work computer or at home with your cellphone. You can title your vehicle and register for two license plate with eTags online: front and rear. All you need is your VIN, and contact info!
Auto loan debt is the third-largest consumer credit category after mortgages and student loans, reports the Consumer Financial Protection Bureau