financialcounselor

Another Detail to Consider when Buying a Car

In Uncategorized on July 16, 2012 at 11:33 pm
This week I spoke to a guy named Aaron who was bummed out about his car situation. It hadn’t broken down or been in an accident, but Aaron had gotten broadsided with a major expense he never saw coming.
Aaron bought his car brand new, first brand new car he ever had, and before he decided on what to buy he made sure to do his homework. I was impressed how much thought he put into it. He told me how he researched the dependability of different models. He stuck to cars that got a high fuel efficiency. He made sure the cars he was considering were all within a certain price range, and he saved up for a down payment.
As he said to me, “I didn’t want to be going to work everyday just to pay for a car.”
Finally he settled on an import that cost $16,000. Because he’d saved enough for a decent down payment, his monthly payment for the car loan was only $150, and Aaron thought he’d done a great thing.
“I couldn’t wait to pick that thing up from the dealership and drive it home,” Aaron said.
But after finalizing the purchase agreement, and before he was to pick the car up, Aaron began calling around to get
insurance for it. Insurance rates were the one thing Aaron didn’t research.
The car was a 2-door, and every insurance office he called quoted him a very high price for coverage, because the car he picked out was considered a sports car, simply because it had only 2 doors. Aaron was dumbfounded. The cheapest insurance rate he could get was almost $200 per month.
“For some reason, the insurance companies say it’s classified as a sports car,” he said. “How is this a sports car? It’s got a 4-cylinder engine.”
Aaron had been careful, he had done his homework, yet there was only this one detail he had overlooked. It ended up taking some of the joy out of his new purchase. Before Aaron even went to pick up his new car, he had buyer’s remorse. If he had just called around to see what it would cost to insure the different cars he was considering, he would have known.
“Look at it this way,” I told him. “At least you did your homework on the other things. If you’d overspent on it, or you bought a gas guzzler, then you’d really be having money problems. You’d be driving that car into a lake.”
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