Before buying a new used car I went to my bank to secure a car loan. Improving my credit has been a little hobby of the last few years. At the time I spoke to Chase bank, my score was around 740. I assumed that getting approved for a car loan was similar to getting a mortgage. I would be approved for a certain amount based on credit worthiness and income. apparently that is not how it works at Chase. You go find a car first, give the information to the bank then hope that they approve you for it.
I did not like the idea of spending the time to find a suitable car only to be denied right at the end. My stepfather recommended that I try a local credit union. I walked into the nearest one and had a video chat with a loan officer over the internet. I explained that I would like to borrow around $6,000 to buy a used car. After giving him my info he processed my loan application my request was denied. Even though I had good credit, he said that since I had no payment history on a similar installment type loan they would not approve it. Apparently 100% on time repayment of my credit cards was not enough to overcome this hurdle.
With this information in mind I thought that I would have to hang onto my Lincoln a bit longer and hope just it didn't break. This lasted for about a month. The pistons started misfiring again when I was way outside of town on a delivery. At first I thought it was bad gas but after trying out a gas cleaner that did not clear up the problem I took it to auto-zone to have the codes scanned. They said it was a misfire in the 1st and 8th cylinder. I knew all about this as I had it "fixed" about 6 months ago for about $1,700. I figured all in I spent over $4,000 to fix a car worth about $1000 on the Kelly Blue Book website if it was in "good condition". Mine was in whatever below "fair" is. I saw an almost identical car listed for $400 on Craigslist. It was time to cut my losses and let the car retire to the junk yard in the sky.
Lincoln Cartier 1998
I called my father and he agreed to co-sign my loan if I could not obtain one alone. I had been looking around at all the other cars on the road to see what was popular. I saw a lot of Toyota, Nissan and Kia vehicles cruising around. I kept thinking that it would be cool to drive a Kia Soul. I had forgotten that I had rented one and driven it on a trip to Vegas a few years ago. I found a used Kia Soul online at the local Kia dealership and took a Lyft to go for a test drive. I have a large body, so my main concern was, would I have enough room in this car? Driving the Lincoln was like cursing around town with your entire living room. Would my stomach mash up under the steering wheel? I fit just fine and the car drove well during my test drive. I told the salesman that I would like to buy it.
Kia Soul 2013
The car was listed at $5,999 on the website. It had close to 100,000 miles. It was in good condition. Some scratches and a small chip in the windshield. The sales person came back with a grid showing a bunch of options. Some how we were now talking $9,000. After looking over the sheet I asked if it was all necessary. He admitted that most were just options. I elected to remove line items like paint protector off the total. With tax, license and fees it was going to be $7,200ish. He also agreed to replace the key fob and get me a spare tire that was missing. I was happy and we proceeded to see about the financing.
This is when the bullshit started in earnest. I let it slip that I had been having trouble securing a car loan and that I had a co-signer available if I needed one. He looked at my credit and driving record and figured we could work it out. I told him all of my income was from 1099 work and it could be difficult to prove my income. He asked me to pull up how much I had made doing deliveries this year. Apparently it was an adequate amount for him to proceed. Then he showed me some options for different service packages. Some of these service packages would have added as much as $200 a month to my monthly payment. I told him I did not want a service package at all and that I would pay my repair expenses out of pocket.
This is when he used his trump card. He told me that the bank would feel more comfortable approving my loan if I had a service package attached to the deal. This was my pain point and he exploited it. I said that if that was the case I would take the lowest possible service package which was the bronze service package. This would make my monthly payments rise from $150 a month to $180 a month. I decided that I could afford that amount so we moved forward. He was able to get the loan approved. I put down $1,750. The interest rate was a bit high at 9% but I was happy that I was able to get the loan on my own. I drove home my Kia Soul that same afternoon and started to think up names for my new used car.
The finance guy had given me a large envelope of documents. I looked through them. The loan amount for the car was not what I was expecting. It said that if I paid off my car in the allotted time the total at the end would be $13,300. WHAT!?! That seemed insane. I looked through all the line items and found that the "service package", which I found out is more commonly called an "extended warranty" was going to add $3,000 to my loan plus the interest on that portion. The finance guy also tacked on another year and a half to the loan term to disguise the expense and keep my monthly payment low. Instead of 48 months it was going to be 66 months.
I was pretty pissed off. It said right on the service contract that it in no way had any bearing on a customers ability to obtain financing. He led me to believe that the service contract was essential to secure the financing. When I thought back to the way he phrased it in his office, he said that bank would feel more comfortable but he never did say it was required. Technically he did not lie about this, just misled me to get what I'm sure would have been a nice commission. Lucky for me the contract stated that it could be canceled within 30 days for a $50 fee. I drove into the dealership the next morning and asked for my extended warranty to be canceled. I was told that he was unable to cancel the contract until my plates and registration came in. He also asked me to strongly consider keeping it. I left his office so I could go find a place to calm down. I came in the next day and talked to a different person in the finance department who told me the same thing. I would just have to wait.
After I got back from my trip to Alaska, I drove back to the dealership to try once again to cancel my warranty. It was day 26 of my 30 day grace period so I was a bit antsy. The finance guy gave me the run around a bit more but finally relented. He handed me my plates, registration and a pamphlet on how to cancel the warranty myself online. He would not even take the time to fill out the paperwork for me. I'm sure most of his customers do not read the contracts over and just pay it so he must have been unhappy that I reduced his commission. The difference in cost is huge. Under the original terms I would have paid $13,300 total in five and a half years. By removing the $3,000 service package my car will end up costing $8,700 if I pay it off in four years. I intend to pay it off faster of course.
Was it smart to cancel this contract? They were providing a real service if the car broke down. It's not like they were just taking my money for nothing, right? The contract required a $200 deductible for each repair. It covered some types of repairs and not others. It would last for 36 months. If I got into an accident my insurance will cover it since I had to purchase full coverage in order to obtain financing. I will have to pay incidental car repairs out of pocket now. I bought it "As Is" so if the engine drops on the ground I could end up looking pretty dumb. While I do anticipate some repairs the car is only 6 years old so I expect it shall be worry free for the next few years, after which time the warranty will have elapsed anyway.
I went into the dealership thinking I was sharp since I had spent time selling phones for Verizon. I was completely bamboozled even though I had seen some of the inside tricks of the trade. Turns out there is a lot more to learn about selling. In the future I need to be better about not putting myself into a pressured situation where I need to make a decision quickly. It was fortunate there were some consumer protections to help me get out of the contract. It would have also been smart to read over the fine print before signing the documents instead of being in a rush to get the deal done.
What should I name it?
