Quote:
Originally Posted by nobody__
Then why spend money refurnishing a house you don't own?
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You can't really compare ownership of an automobile (personal property) with ownership of a house (real property). The law underlying title to personal property and real property are different and in some cases are contradictory. In the US, it also varies by state. Just stick to personal property.
When you buy a car, you
do own it, whether you finance it or not. When you finance it, you pledge the car as collateral under a security agreement, and the bank records a lien against it with your state government (usually the Secretary of State's office). What that means is that although you own the vehicle, the bank has the right to seize your property and sell it
on your behalf to satisfy the loan if you default.
If you read your loan documents, you will likely notice that the loan agreement not only says that you own the vehicle but also requires
you to promise the
lender that you own it. Mine says this:
3. OWNERSHIP OF THE PROPERTY - You promise that you own the Property or, if this Loan is to buy the Property, you promise you will use the Loan proceeds for that purpose. You promise that no one else has any interest in or claim against the Property that you have not already told us about.
Since you own it, you can certainly modify it UNLESS your financing contract says you that you agree not to do so. Mine says this:
5. USE OF PROPERTY - Until the Loan has been paid off, you promise you will: (1) Use the Property carefully and keep it in good repair. (2) Obtain our written permission before making major changes to the Property or changing the address where the Property is kept.
Unfortunately they don't specify what constitutes "major changes," but I think common sense would prevail. If it's something that could be undone fairly easily, like swapping out the header or exhaust, I wouldn't expect it to be considered a major change. Trying to turn this car into a convertible would. You could always ask the loan officer who sold you the loan if you weren't sure. If you're a good customer with good credit who always pays on time, those guys want you to be happy so that you'll come back and borrow more money later.
And even if you don't ask and just do it anyway, how would they find out about it, and what could they do about it if they did? As long as you make your payments, it won't matter. If you default, they'll repossess it and try to sell it to pay off your loan. They may not even bother trying to get any extra money for the value of the mods, so you might lose the value you put into them. On the other hand, if you do something stupid to your car (like a botched conversion to a convertible) that hurts the value so that they can't get enough for it to satisfy your loan, you would probably end up paying the difference.
The only thing that worries me about mods is insurance claims. I've been ****ed around by adjusters in the past, and I wouldn't put it past one of them to try to deny the value of the mods if my car were totaled. I would hate to put $20K in mods into a car like this, have some idiot run a red light and have the adjuster total it and offer me just the book value of the stock car. That's the point at which I would call a certain vicious lawyer I know, but I'm not confident even he could help. I would probably just end up buying the car back from the insurance company for salvage value and part it out. It would still be a pain in the ass, though.
On the other hand, if your mods were to severely damage the value of the vehicle in a way that insurance wouldn't pay out, like causing the engine to explode, you might find yourself without a car but still with a payment on whatever's left on your loan.