I agree, though I think that ideally companies are advocates for their customers. For example, companies have to turn information over to courts, but they can push back on some, and publish transparency reports for others. Yes, they have to comply with the law, but imo a company has an obligation to advocate for their customers.
This depends on the jurisdiction and the agreement you've entered into.
In general:
Lease - Finance company owns the asset, you are obliged to service the payments. You may have an option to transfer title at the end of the period (depending on jurisdiction).
Loan - You own the asset, secured against the asset.
(There are some UK/US-specfic product types due to difference in things like tax law)
Leasing (in general) is popular as it has tax-advantages for smaller businesses/individuals around depreciation, which can lead to good pricing for end lessee.
(source: Made software for the asset finance industry for a decade or so in the UK/EU + US)
At the time of repossession - You no longer own the asset. It's not like they send the repossession guy out the first time you miss a payment. Repossession happens after the bank has taken you to court (Admittedly, through an expedited process, because this type of claim is so so common), and the repo guy is acting as an agent of the court.
This is the law. It is working as intended. It's also moral - If you enter into a contract to buy something on credit, you should uphold your end of the contract. Specific instances have been wrong, and we can argue the merits of this particular case, but car manufacturers assisting the new owners of assets that have been repossessed in securing their asset is at worst morally neutral.
The bank uses title of vehicle as collateral. You own the vehicle but allow repossession for failing to clear the debt. But just because the car is repossessed doesn’t clear the debt unless the vehicle covers the debt wholly. Bank will sue for the difference.
The UK has some tricky loan contract law which allows a lender to do this, unless the purchaser challenges it in court it using a very specific procedure - which of course most of the population doesn't know about.
Many people are surprised by this. They assume repossession means the loan is paid off - until they discover they've lost their car and are still on the hook for more or less the current market value.
I don't think that's quite right, you own the vehicle legally and you owe the bank the loan. However as soon as a repossession takes place the legal title to the vehicle does change.
That varies by state. Where I live, the financing institution with the lien keeps the title until it is paid off.
Kinda nice when you trade in a car you still owe a bit of money on, as you don't really need to bring anything with you other than the key and your drivers license; the dealer does all the work getting it cleared and transferred.
Isn't it reversed: that the repossession takes place because the legal title to the vehicle changed, due to the contract being broken by lack of payment?
If the car was titled to the bank, they would have to be involved and would be listed in the registration process with the state getting plates, etc.
You are the owner, they simply have a lien on the vehicle which is noted on the title. Once you pay off the loan, they send you information to get the lien removed and a clean title.
It could be we're not distinguishing lease vs. finance in these threads. In my experience in Massachusetts, lease titles were in a holding company's name, while financed vehicles were in my own.
P.S. Looking around a bit there is a lot of variation on how this works depending on locale. So I guess lease vs. finance is just another way things can differ out there.
I wouldn’t be surprised it varies a lot. Just vehicle registration varies. In California the plate stays with the car, but in other states new plates are issue and old plates move to the original owners new car.
No doubt it would be fascinating to see how each state does it. I only have experience with a few.
It's not universal. Some places have specific regulations that govern this and so they specifically carve out a weird "ownership but non-ownership" scenario. E.g. mortgages here in South Africa. Other places yes it's in your name but you put it up as collateral on the loan itself, etc etc etc.
Bottom line, the government just makes it obscure and difficult to determine the real dynamics between the two parties, and the weird interaction it may have with existing laws governing theft/ownership.
You don't own the vehicle if you have a loan, the bank has the title. The title holder is the owner. The best part about paying off a financed car, to me anyway, is the day the title shows up in the mail and you actually own your car.
I'm sure that somewhere has crazy rules but the general idea of a secured loan is the lender can easily take your security if you don't pay the debt. If not for that it isn't secured, is it?
Car loans are secured on a car. If you want to just borrow money with no security you can get a (likely far more expensive) unsecured loan if the bank judges this to be a good risk, or take an overdraft on a current account or use a credit card, all unsecured debt.
Collaterals don't require ownership by bank where I live. Loaned cars are owned by their loaners (but leased cars aren't, although they may transfer ownership to the leaser after a period of time, depending on the terms of the lease). Not sure how these things work in the UK, though.
1. Unsecured loan - if you have the credit facility available then you can borrow an unsecured amount of money and purchase a car. Neither the seller nor the bank have any ownership interest in the car. The loan isn't secured on the car. You are free to sell the car on and transfer its title to anyone else. If you default on the loan then different proceedings may take place to recover the money owed, but that may not necessarily include re-possessing the car (if it's valued under GBP3000.00). The loan company can come after any of your assets.
2. Hire Purchase - the seller lends you through a credit company the price of the car (and interest). The seller transfers the title of the to the credit company. You do not become the "owner" of the car, instead you rent it until such time the total amount of the loan is paid off. You don't have any right to sell or transfer ownership of the car. If you do the unfortunate buyer of the car may wake up one morning to find that it's been repossessed. This is why as a buyer performing HPI checks for any outstanding hire purchase or secured loans on the car are fairly important.
There are also other schemes such as leasing which make it more obvious that if you don't keep up with the payments then the seller or finance company can come along and repossess the car.
To take a contradicting pov... I think this sort of expectation/ideal has done us more harm than helped.
As advocates, companies are fickle and unreliable.
Presenting as advocates, companies always stress how aligned their interests are with customers'. We'll, that's true until it isn't. Once it isn't, it flips.
That's useless. Better to keep in mind that companies aren't your advocates. They're your salesman.
The principle-agent problem is not just limited to companies. Everything you've written applies to people in general. Advocacy in and and of itself is a fickle enterprise.
