If You Are Making Car Payments, You Don’t Own The Car

Posted on September 17, 2007

We usually talk like we own the car, but this is just a delusion. If you secure financing for an automobile, the bank or financing company probably owns your car. The person with the auto loan is most likely granted non-possessory security interest in the vehicle. Basically, the bank owns the car and you are not able to sell the car without the loan being paid in full.

The reason I mention it, is to clear up what I think is a major reason it is so easy to be in debt. The lending industry wants debt to sound rosy and cheerful, so that consumers will go into more debt. If we continue to fool ourselves into thinking we own things that are not actually ours, we will continue to by more things we can’t afford. Yes, I said it! If we are paying payments, we probably couldn’t afford the item. We delude ourselves by affording payments!

If you think I am crazy or sound foolish, you probably never received the title to a car in the mail after you made your last payment(or paid cash in full). It is just a piece of paper, but it feels so good for some reason. I would love the world to change how they talk about debt. Let’s talk more about the great feeling of working hard for something and paying for it in full, rather than tricking ourselves into thinking items that we don’t own are ours.

» Filed Under Cars, Materialism, Psychology of Debt

Trackbacks/Pings

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Comments

7 Responses to “If You Are Making Car Payments, You Don’t Own The Car”

Double Eagle (13 comments.) on September 18th, 2007 12:37 am

This is dead-on accurate. People have come to accept debt as a part of life. I know I’m guilty as charged.

I woke up to the car payment issue a while back and have always intended to pay cash for cars from that point on, but I don’t think I’m going to be far enough ahead by the time I’ll need to start looking again.

However, I can promise you that my next car buying experience will be completely different than previous ones. I can’t see myself even considering a new car again for the foreseeable future. $5k cash (if I can do it) for something “good enough” is going to be in the front of my mind.
SavingWithMe (4 comments.) on September 18th, 2007 9:19 am

Awesome post. Hits home the point that just because you can afford the “monthly payment” does not mean you can afford the item. I am making it a point that my next car I will pay for in cash. I had a friend save up for a brand new Honda Accord and pay with cash completely and in fact he has never had a car payment in his life. He either drove old cheap cars or saved up and bought quality, brand new.
Mya Moola (1 comments.) on September 24th, 2007 2:19 pm

It is similar to houses, eh? As a renter, I’m constantly bombarded with homeowners who like to brag that they are not “throwing away money” on rent because they, unlike me “own their home.”

Beyond the fact that I have zero desire to own a home at the moment, the simple truth is, you don’t “own” anything until it’s paid in full. That holds true for me anyway, I won’t feel like I own a home until it’s mine in full and no bank can foreclose on it.
The Happy Rock (166 comments.) on September 25th, 2007 12:09 pm

@Mya Moola - Yes houses are kind of similar, so changing the language does apply there.

Don’t worry about not owning a home, there are many many great reasons that renting makes sense.