Can I put a car into my trust if I’m buying it with a loan and don’t own it outright yet? – North Carolina

Short Answer

Sometimes, but it usually depends on whether the lender (the lienholder) will allow the trust to be listed as the owner on the North Carolina title while the loan is in place. In many financed purchases, the lender requires the borrower to title the vehicle in an individual name, with the lender recorded as lienholder, which can block or delay moving the car into a trust. If the lender does allow trust titling, the title application and insurance must match the trust ownership setup to avoid DMV and coverage problems.

Understanding the Problem

In North Carolina, can a person buying a vehicle with a loan have the vehicle titled in the name of a revocable living trust even though the lender will have a lien and the buyer does not “own it free and clear” yet? What happens when the lender, the North Carolina Division of Motor Vehicles, and the insurance company each require the owner and lienholder information to match? The key decision point is whether the financing paperwork and title application can list the trust as the owner while still properly recording the lender’s security interest.

Apply the Law

Under North Carolina law, a financed vehicle can have an owner on the title and still be subject to a lender’s security interest (lien). The lender’s lien is generally perfected by having it shown on the certificate of title, and dealerships/lenders commonly control how the title application is completed as part of the loan closing. As a result, “can the car go into the trust now?” often turns less on whether a trust can own a car and more on whether the lender will approve titling the vehicle in the trust’s name while its lien remains on the title, and whether the DMV paperwork is completed consistently.

Key Requirements

Lender approval for trust titling: The loan agreement and lender policies typically control whether the trust may be the titled owner during the loan term.
Correct title and lien notation: The title application must properly identify the owner (individual or trust) and list the lender as lienholder so the lender’s security interest is properly recorded.
Consistent insurance and registration setup: The insurance policy and named insured/garaging information should align with the titled owner and any listed drivers to reduce underwriting and claims disputes.

What the Statutes Say

N.C. Gen. Stat. § 20-58 (Perfection of security interest on certificate of title) – explains that a security interest in a titled vehicle is generally perfected through lien notation on the certificate of title and outlines how the application is submitted.
N.C. Gen. Stat. § 20-72 (Transfer by owner) – sets rules for assigning/transferring title and notes special handling when a lien is taken in connection with the transfer.
N.C. Gen. Stat. § 20-58.4 (Release of security interest) – addresses timing and steps for releasing a lien once the secured obligation is satisfied.

Analysis

Apply the Rule to the Facts: The vehicle purchase involves a loan, so the lender will have a security interest that is typically shown on the North Carolina title. That makes the lender’s approval a practical requirement, because a lender can refuse to close the loan if the title will be issued to a trust rather than an individual borrower. If the lender and insurer require the titled owner to be the individual borrower, the car may need to stay outside the trust until the loan is paid off (or until the lender later approves a retitle).

Process & Timing

Who files: Usually the dealer and/or lender as part of the purchase closing, or the owner after purchase. Where: North Carolina Division of Motor Vehicles (often through a license plate agency). What: Title application showing the intended owner (individual or trust) and the lender as lienholder. When: Typically at purchase; lenders and dealers often require submission promptly after the sale to get the title issued with the lien properly recorded.
If the lender allows trust titling: Confirm the exact trust name and trustee capacity that must appear as the owner, and confirm the insurance carrier will write the policy with that ownership structure (often the trust as owner with listed drivers and the lender as loss payee/lienholder).
If the lender does not allow trust titling now: Title the vehicle in the individual borrower’s name with the lender lien recorded. After payoff and lien release, submit a transfer into the trust (a retitle) through the DMV process.

Exceptions & Pitfalls

Loan documents can prohibit retitling: Even if a trust is revocable and controlled by the borrower, some lenders treat retitling as a prohibited transfer while the lien is outstanding.
Mismatch between title and insurance: Titling the car in the trust while insuring it only in an individual name (or vice versa) can trigger underwriting issues, cancellation, or coverage disputes after a claim.
Incorrect trust name/trustee listing: DMV and insurers often require the trust’s full legal name and a trustee designation; inconsistent naming can cause rejected paperwork or delays.
Assuming “not owning outright” prevents any trust ownership: A lien does not automatically prevent trust ownership; the practical barrier is usually lender consent and correct lien notation.

Conclusion

In North Carolina, a car can be owned by a trust and still be subject to a lender’s lien, but the lender often controls whether the trust can be listed as the titled owner while the loan is in place. The key threshold is lender permission for trust titling and a title application that properly records the lien. If the lender will not allow it now, the common next step is to wait until payoff and then transfer title into the trust after the lien is released.

Talk to a Estate Planning Attorney

If a financed vehicle needs to be coordinated with a trust and an insurer is raising titling concerns, an estate planning attorney can help line up the trust ownership language, lender requirements, and DMV steps to reduce delays and avoid coverage problems. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.