Almost three years ago, I made the biggest financial folly of my life.
Although spring was just around the corner, we were still in the throes of the harshest winter I’d ever experienced. Snow drifts were so high that they were taller than some buildings. Tunnels had to be dug out to make way for entrances. And I just happened to have the unfortunate luck of having a car that was no longer in working order and a Dad that was dying of cancer. Despite all the ice, the heat was definitely on.
Finding rides was not always easy and walking to work was not always possible, but I managed for a while. Regardless of my efforts, Dad was getting worse and I needed something reliable to get me to and from wherever he was stationed. Under pressure, I made a hasty decision. A blunder I’m still paying for.
I found a nice, affordable vehicle with low miles and decent gas mileage at a used car dealership a few towns over. I had no credit, which had left me little options, but they were willing to work with me as a first-time financier. But there was a catch. I had to take out a loan with their bank, a bank that was curiously attached to their building. At the time, I didn’t care. Didn’t think twice. I was so anxious to have my own ride that I probably would have signed away my soul. Additionally, they had an insurance company that had partnered up with them as well. And, as you may have guessed, this insurance company purported to give a great deal to the dealership’s customers. Naturally, I went with them.
Things went smoothly at first. I put $1,000 down on the vehicle, which was only a little more than $5,000 (loan interest included). Monthly payments were a minimal $200. A steal, I thought. I wasn’t too wrong on that account – steal being the operative word. I then sat down with the insurance agent and we went through everything extensively. Everything I was supposed to pay up front, I did. Or, at least, I was lead to believe that I did.
I made three major mistakes. The first being that I should have gotten a loan from a different bank. The second being that I should have included the cost of the vehicle registration in the loan. And the final mistake was that I should have kept my previous car insurance.
Although I kept up with the payments and insurance, I was having difficulties coming up with the money to register my new-to-me car. After the allotted 30 days were up, I was still driving around without plates. I got pulled over twice. The first time came with a warning and the second time, a week after my Dad’s death, came with a ticket. That ticket meant a court date. That court date meant a fine and a small discovery with huge consequences. The discovery was that the insurance company had cancelled me without notice, claiming that I didn’t pay a deposit.
That didn’t make any sense to me. I had sat down with the insurance agent for an hour and had gone through everything, assured that all my bases were covered. I’d had the vehicle for almost two months and had kept up on all other payments. I’d even, quite literally, just gotten approved for a micro-loan to finally afford the registration of the car. But having no insurance means repossession, more fines, and a suspension of my license. I was in over my head. So I lost the car and a lot of money. I’ve had to deal with SR-22 insurance (or no license) since then and will finally be free of it next month, after three years. To top it all off, about a year ago I received a notification in the mail that they were suing me for an additional $5,000 due to a “breach in contract”.
After talking with my brother, someone who is familiar with the subject, I was informed that this was a stint that is often pulled on unsuspecting first-time financiers with low income. It’s the reason that car was so cheap and the reason they were so ready to approve me. It’s something that can be gotten away with legally.
Moral of the story? Do your research first, even if you’re desperate! If something seems too good to be true, especially when it comes to car shopping, it usually is. If you’re a first-time buyer, bring someone along who has a little experience.