Don't tell me where your priorities are.

Show me where you spend your money and I'll tell you what they are.

-James W. Frick

Plan YOUR work! Work YOUR Plan!

Saturday, April 16, 2011

Trade-ins, Gap insurance, and Hamsters

The worst financial mistake I ever made was buying a used 2003 Range Rover, when I didn’t even need a car. That is now over, well over in the sense that I no longer dealing with it. I am however still paying for it. Let me explain…

Last February I bought a used Ranger Rover from a small dealership, stupid in so many ways! I couldn’t afford it, not even close. It was my first vehicle ever, what a great one to choose. I got caught up in the moment of buying something.

Buying the Range (affectionately known as Mr. Grayson because the GPS sounded like and English man) wasn’t the first mistake I made, that was buying him in the first place and paying way too much for him. He was in the shop more than he was in my parking spot.

So, I got ripped off (by FC AUTO in VA). If that wasn’t bad enough, good old Grayson didn’t pass Maryland State inspections, I had to get things fixed so it would pass, and I had to go to the DMV myself and register and pay taxes. Then there was that oil leak that came out of nowhere and don’t even get me started on the transmission! Fortunately for me I bought an extended warranty that covered most of the repairs, but I still had to pay the co-pay for all of this work. Needles to say my credit cards got a lot of use during this time.

I finally decided I had enough and began looking for new vehicles because he was costing me too much money, let’s not talk about how much it cost to fill him up. I took him to Carmax and that is when I found out I had greatly overpaid for beloved Mr. Grayson. I had overpaid by $7,000, according to what he was worth. I left Carmax high upset and feeling more stuck than ever.

Then one day I see a Kia Soul on my way home one day, its cute ok let me check it out. I do the research and find out I can get a top of the line AND it had great gas mileage. I went to Kia, test drove it and actually loved it! After being in the dealership all day and learning a lot about buying a vehicle, I now have a brand new 2011 Kia Soul. Kia worked out a deal to get me the most out of Mr. Grayson as possible but that gap was still there. The payments r pretty close to what I was paying for Grayson, but maintenance and gas is much cheaper.

Through the Finance Manager, Earl, I learned about Gap Insurance. Basically Gap Insurance is when you owe more on your vehicle than what it is worth. Incase anything happens and the vehicle is totaled, you won’t owe the difference. For more information go here. For the financial lessons I learned from Earl, all he wanted in exchange was a “samich”.

To say the whole process, from buying Mr. Grayson to the Kia, has been a huge learning experience. A costly one. I did so many things wrong:

1. I bought a luxury vehicle from a small dealership
2. I bought a vehicle I couldn’t afford
3. I kept Grayson way too long

What saved me was my Credit Score, giving me more options. Just shows the importance of a good Credit Score.

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