# Lienholder

> What a lienholder is on a financed car, why lenders require collision and comprehensive coverage, and how the lender is named on your auto policy.

Canonical page: https://statecover-guide.com/glossary/lienholder/  
Last reviewed: October 28, 2026 by the StateCover Guide editorial team  
General information, not legal or insurance advice.

## Quick answer

A lienholder is the bank, credit union or finance company that lent you money to buy your car. Until the loan is repaid, the car is collateral, so the lender has a financial interest in it and in how it is insured.

## How it works

Being financed changes your insurance in a few ways:

- **Required coverage.** Because the car secures the loan, lenders usually require collision and comprehensive coverage, not just the liability insurance your state requires. A leasing company can set the same condition.
- **Named on the policy.** The NAIC explains that the lender is listed as the loss payee on your declarations page, which protects its interest when the insurer pays for damage to the car.
- **If coverage drops.** The Texas Department of Insurance warns that if you cancel or lose the required coverage, the lender can buy single-interest coverage and add the cost to your loan payment. That coverage is expensive and protects only the lender, not you.
- **If the car is totaled.** The insurer pays the car's value, which may be less than the loan balance. Gap insurance, offered by many dealers and lenders, is designed to cover that difference.

When you shop for insurance on a financed car, give the insurer the lender's details so they appear correctly on the policy.

## Related terms

- [Loss payee](https://statecover-guide.com/glossary/loss-payee/)
- [Gap insurance](https://statecover-guide.com/glossary/gap-insurance/)
- [Declarations page](https://statecover-guide.com/glossary/declarations-page/)
- [Full coverage](https://statecover-guide.com/glossary/full-coverage/)
- Guide: [Gap insurance explained](https://statecover-guide.com/coverage/gap-insurance/)

## Sources

- [NAIC, Auto insurance consumer information](https://content.naic.org/consumer/auto-insurance.htm) — the lender's interest in a financed car, required collision coverage, loss payee on the declarations page
- [Texas Department of Insurance, Auto insurance guide](https://www.tdi.texas.gov/pubs/consumer/cb020.html) — lender coverage requirements, single-interest coverage, gap insurance after a total loss