Glossary

Lienholder

The bank, credit union or finance company with a legal claim on a financed car until the loan is paid off, usually named on the insurance policy.

Also called: lien holder, lender, secured party

A lienholder is the lender that holds a lien, a legal claim, on your car as security for an auto loan. Until you pay off the loan, the lienholder is recorded on the vehicle's title, and in some states it holds the title itself. For a leased car, the leasing company owns the vehicle outright and plays a similar role.

Because the car is the lender's collateral, the loan contract usually requires you to carry collision and comprehensive coverage, often called full coverage, with a maximum deductible, and to name the lender on the policy, usually as loss payee. If your coverage lapses, the lender can buy expensive force-placed insurance and add the cost to your loan.

When there is a claim, the lienholder has a stake in the payment. Repair checks may be made out to you and the lender jointly, and in a total loss the insurer pays the lender first, up to the loan balance, with anything left going to you. If the car's value is less than what you owe, you remain responsible for the difference unless you have gap insurance. Once the loan is paid off, get the lien released on the title and ask your insurer to remove the lienholder from the policy.

Last reviewed October 4, 2026

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Related terms

Loss payee The lender or leasing company named on your auto policy to receive claim payments for the car, alone or jointly with you, until the loan is paid off. Gap insurance Pays the difference between a totaled car's actual cash value and the larger balance still owed on its loan or lease. Full coverage Informal shorthand for a policy combining liability with collision and comprehensive, the mix lenders usually require. It is not a defined policy type. Total loss A car so badly damaged that repairs would cost more than it is worth, or more than a state threshold, so the insurer pays its value instead. Loan/lease payoff coverage Optional coverage that pays part of what you still owe on a financed or leased car if it is totaled or stolen and the payout falls short of the loan.

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Related insurers

Fortegra (formerly Tiptree) A Jacksonville specialty insurer sold by Tiptree to DB Insurance in 2026; its auto premium is mostly lender-related physical damage cover, not driver policies. Universal Insurance (Puerto Rico) Guaynabo-based insurer of Universal Group that calls itself Puerto Rico's largest auto insurer, selling annual, double-interest and liability auto policies.