A lien is created as soon as you finance a car. In most states that means the lender holds the car's title and is considered the vehicle's legal owner until the loan is paid in full. The lien protects the lender and allows them to repossess the car if the borrower stops making payments.

An auto equity loan is a type of secured loan that allows you to borrow money against the value of your car, often whether you own it outright or have some equity in your car. Since you're putting your car up as collateral, auto equity loans may have longer terms and lower interest rates.