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Yup, here comes another too-much-reading-about-finance induced post! Feel free to pass over if it isn’t your thing, I totally get it. I am WAY too much for most people when it comes to my money quirks… (Pity my husband, I am not kidding.)

Anyhow, this time my reflections come to sit on what’s been deemed by some to be a curse and evil to be avoided at all costs, and what others see as a normal part of life: car loans!

Necessary evil?

Um, I honestly don’t know many people who could walk onto a car lot and buy either a new-new or new-to-you car without batting an eye. And I mean buy-buy, like write the check and own the puppy free and clear, right then and there. So, to like 85% of my friends (yes, I totally made that number up) car loans represent an expected life expense.

Except that, to me, it isn’t.

Yet I have a loan!

Yup, it isn’t an expected expense to me, but I still have a car note to call my own. Awww, aren’t I such a lucky one? Perhaps only in that my note is an itty bitty one, compared to the monsters that some people must have.

You see, I lived for nearly two years free of monthly car payments. At ~$250/month in insurance, it is definitely not missed in this house. In some quick, inconclusive searching, it seems that the average monthly car payment teeters around the $400 mark. $400?!?! I seriously cannot imagine having a $400/month expense thrown at me. It would be insane. And for what? I really don’t see that many awesome cars driving around… (Where I live anyhow.)

So what’s my deal?

I guess it helps that I’m not interested in brand-new cars. Like, at all. I have zero desire to go out and own a shiny new zero-owner car. Can’t tell you why, honestly, just that that’s how I am. I’d rather buy used, after looking into how to pick out a good used model. Maybe not surprising then that my youngest is almost nine years old? And the oldest nearly twenty?

Maybe it’s just my insane love of ’80′s era, boxy Japanese cars. Or my appreciation of the cars the ’90′s produced… But there aren’t many new cars I find myself lusting over. It’s mostly the old ones — A beautiful FC RX-7. A cute AE86. Heck, even the ’80′s Volkswagen GTi’s get my attention, and I’m not normally a VW fan. (To say nothing of BMW’s from the same years!) I just find that the cars I want aren’t produced anymore. Or just the ones that are I can’t afford new; hello Lotus, Ferrari and Porsche.

Then there’s the unthinkable….

I was flabbergasted the first time I ever heard of someone modifying a car they didn’t own outright…. Using credit cards. I think I had to pick up my jaw and pop it back into place. I had no idea what to think.

First off, I find it presumptuous to begin seriously modifying a car that you don’t own outright. No, I’m not totally against it…. I mean, I have my 240SX financed, and we’ve already put quite a lot of money into her. However, I know that owning her will be accomplished soon enough. I’m biding my time to build up my credit, but fully intend on killing the note by the one year mark. It’s only a two year loan… But I just can’t let it stick around that long. I must own my third beautiful Japanese car free and clear.

My feelings were even more solidified when I heard the story about one guy who’s S2000 was repossessed. If I remember right, it was a black 2006…. With a crap load of expensive work done to it. She was awesome and killer, with a set of Volks and the bolt-on supercharger kit. One beautiful car, with one tiny problem — she wasn’t actually owned. She ended up getting repossessed by the bank… Presumably because the guy stopped paying on his note. So he didn’t have the money to make his car payment, but he had the money to pay for expensive mods?

Only one conclusion here.

The only logical conclusion would be that he didn’t have the money for the modifications, either. In which case I’m extremely amused — how would you like to owe a ton of money for modifications on a car that you no longer possess? Yup, I’m sure that’s everyone’s idea of a good use of funds here.

Then there’s the other guy that I knew here. I found out that he was still paying on his Civic, but he used credit cards to buy his supercharger set up. Sure, he was counting on a pending deployment to pay off the card… But still. If you’re gonna spend money on a car, why not pay it off? There was another Civic guy here who was still paying on his when he supercharged it. Only to turn around and trade it in for an Evo X, which now has some (pointless, mind you) mods. I can just about guarantee you that he did not buy that girl outright.

Am I advocating no fun?

No, I’m not saying that owing money on your car has to come before everything else. Just that modifying your car shouldn’t take priority over owning your car. If you’re positive you can handle the payment, go right ahead… With cash, please. Don’t go further in to debt to finance a hobby that you cannot afford. Cut costs elsewhere, do yourself a favor and embrace good personal finance habits now and figure out how to truly afford it. I assure you, it can be done. If you can’t, then you must not be as into it as you thought. Money’s good for sorting out priorities that way.

Closing thoughts.

Car loans probably aren’t as evil as I initially thought. That doesn’t mean I’m running out to go and finance another car, though. I fully plan on financing something new and fun after I get situated into my first “real” job… And I’ve currently got my eye on a Lotus Elise or Exige for that. Then again, the Porsche Cayman is also looking like a really good option too…

For now, I’m practicing on my 240SX — learning to budget for payments, finding extra money for the debt and creating a buffer that would pay my note for x number of months if something happened, cover repairs just in case or, eventually, just pay the darn thing off.

All in all, it’s up to you to use credit wisely. Lessons learned in the bust of the housing bubble apply to car loans, too — don’t finance more than you can comfortably afford, including all the expenses besides the mortgage/car payment. (You know, insurance, maintenance, etc.) It can either help you or hurt you, depending on what you do with it.

Just keep in mind that modifying a car is that much more sweet when you know that nobody can come in and take her away from you. And, seemingly contrary to popular belief, there is life without car loans — and it’s pretty awesome if you ask me.