Lienholder
The lender or other party whose claim on a vehicle is recorded on its title.
A lienholder is the bank, credit union, finance company or other party that holds a recorded claim on a vehicle. California’s DMV calls the lienholder the “legal owner.”1 While a lien is recorded, the lienholder often keeps the title, on paper or electronically.
If you still owe money on a car you want to junk, the lienholder has to release its claim before the buyer can take clear ownership. Call the lender for a payoff amount and ask how they handle releases.
Many lienholders now hold titles electronically. In Texas, the lender stores the electronic record instead of a paper certificate. When the lien is satisfied, the lender submits an electronic release, the lienholder is removed from the record, and a paper title is sent to the owner.2
References
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California DMV, Vehicle Industry Registration Procedures Manual 11.175, “Transfer to ‘Estate of’”, https://www.dmv.ca.gov/portal/handbook/vehicle-industry-registration-procedures-manual-2/transfers/transfer-to-estate-of/ ↩
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Texas Department of Motor Vehicles, “Electronic Lien and Title Program (ELT)”, https://www.txdmv.gov/dealers/lienholders ↩