Although there aren’t as many modified vehicles around these days, there are still a small but devoted number of enthusiasts who can do extraordinary things to ordinary cars. Is it possible to modify a financed car in Canada? was one query our auto loans staff received recently.
Changes can take many different forms. While body kits, lowering kits, large wheels, and flamboyant colours come to mind first, a straightforward tow hitch or stereo update can also be considered a modification.
Can you modify a financed car in Canada?
Maybe.
Modifying a Financed Car
The kind of auto financing you have has a big impact. You may modify your vehicle if you’re taking out a personal loan or an unsecured auto loan. You normally cannot modify the car if you are utilizing manufacturer, dealer, or secured car financing.
The key factor is ownership.
You are the car’s owner for unsecured loans. Even though you are repaying the loan, the car is still yours and yours alone to deal with as you like. You are free to alter it or do whatever you want with it.
When you pay for the car, you become the registered owner. This entitles you to full rights over the car. A lender may still be able to repossess the car if you default on the loan but if you keep up payments, it’s yours.
Car Ownership & Modification
With the majority of manufacturer, dealership, and secured loans, you are not the car’s actual owner. Once the debt is completely repaid, you only become the owner. You must adhere to any restrictions outlined in the loan agreement because you are not legally the registered owner.
Most loan agreements of this kind will have restrictions on the customization of your car before you buy it. Even simple modifications like replacing the wheels or car mats are prohibited by some auto loans!
Check your vehicle loan documents carefully before you do anything with your car. Even if you took out an unsecured loan, a brief glance over the loan agreement should make it clear to you if you have the option to change it or not.
The decision to replace the matting or enhance the audio system is then up to you!
Should You Modify Your Car?
This is a more general question that has to deal with both taste and finances.
You can do whatever you want with the car, whether you own it outright or have an unsecured loan. You must, however, ensure that you can make the required payments and that any alterations you make won’t lower the property’s worth.
Additionally, you need to be careful that nothing you do to your car will make it less likely that you will be able to sell it or trade it in.
Modification & Value
Always keep an eye on your car’s potential value if you do decide to modify it. Not just for selling or trading, but also in the event of a repossession. If you reduce the car’s worth and the finance isn’t fully paid off through repossession, you can be responsible for the remaining balance.
Although it is not something to worry about on a daily basis, it is something to take into account when making any preparations for improvement.
Trading in Modified Cars
Many dealerships don’t like taking modified cars as trade ins. They are something of an unknown quantity and can require remedial work to bring them back to stock. As dealerships tend to resell used cars on their lot, any work they have to do will be reflected in the price they offer.
There is a lot to understanding auto loans and the various conditions. If you need help, contact our team.