I bought my first car in October 2019, and I bought my second car in November 2019.
This was not a shopping spree, but a necessary replacement after a confused driver ran a red light and t-boned the passenger side of my new (to me) car. Fortunately, I was unscathed with only minor whiplash.
Overall, my experience was better than most when it comes to totaling your car, thanks mainly to Connexus. I would like to share my perspective on buying cars and preparing for unexpected circumstances.
Buying a Car
A car symbolizes many things: a status symbol, a tool, a refuge, or a source of income. It’s a purchase I do not take lightly. I am an accountant by trade, so I am very particular when it comes to spending money.
My parents graciously lent me the family Nissan throughout college and into the second year of work after graduation. When my younger brother needed a car for school, it was time for me to pass the Nissan down.
I had two options when it came to purchasing a new vehicle: lease or buy used with financing. At the end of the day, I wanted to own my car, AND I wanted something fun. After meticulous research, I settled on a white 2013 BMW 528i. It was clean, well kept, affordable, and an absolute pleasure to drive.
Thankfully, my parents taught me about the importance of good credit, so when I called Connexus to inquire about auto loans, I found out I qualified for a low rate.
Another reason my car buying experience was so smooth was because I got pre-approved financing before I went to the dealership. I had read about this concept, but I learned how valuable it was very quickly.
When you have your financing set up before going to the dealership, salespeople consider you a cash buyer. This gives you the position of power because you can walk away from a deal you don’t like and find a better one at the lot across the street. It also allows you to negotiate on the vehicle price as opposed to loan details, which can save you money.
Luckily, the dealership I was working with had excellent customer service and the exact car I wanted. Once we had agreed on the price, Connexus sent the check confirmation, and I got my keys.
Crash and Claim
The next few weeks were awesome (minus going to the DMV)! Driving a car that you worked for is a gratifying feeling, and it was a significant boost of confidence because I had completed a very important goal in buying my own car.
Then, just one month later, I was crossing an intersection I had crossed thousands of times before, and the next thing I knew, I was jolted to the left and I could smell gunpowder from the airbags. When I opened the door and stepped outside, I saw a yellow Mustang’s hood crumpled to the windshield. Fortunately, both the other driver and myself were okay.
There was not much question of fault, so we exchanged insurance info and filed our police reports. Once his insurance accepted liability, I got my rental car.
What I did not know is when I took out my initial loan, a Guaranteed Asset Protection (GAP) insurance policy was included. I forgot that when I purchased an extended warranty through Connexus, I also added CUNA Mutual Group’s GAP insurance through Connexus. Based on my vehicle and loan details, the team at Connexus knew it would be a useful addition to my loan if anything were to happen. Finding out I had that protection was a major relief because it saved me a lot of money.
GAP insurance kicks in if your car is totaled or badly damaged. It covers the difference between what your vehicle is actually worth, and the amount you still owe on it.
It took a couple of weeks to get a refund on the warranty, which would close out my loan, but in the meantime, I called Connexus because I needed another car.
Buying the Second Car
Since this process was now familiar to me, I was quickly approved for another great rate, and I started shopping.
Of course, Connexus made this process very easy because this time, I made sure I again had GAP insurance and an extended warranty.
Lessons I Learned Along the Way
Your lender should be your friend. If you decide to finance your car, then work with a financial partner that exists to safeguard your financial interests. A credit union has your success in mind. They are not trying to sell you a car, and they will give you the best interest rate possible.
Depreciation can be a friend or an enemy. I intentionally purchased both of my cars because they were almost fully depreciated. I didn’t anticipate getting t-boned so quickly (or at all), but my reasoning was proven to be valid because the insurance company valued my car and settled for more than I paid for it.
Your investment is for you to enjoy, not worry about. If you finance your vehicle, then make sure your bases are covered if anything happens. New cars depreciate very quickly, so if you finance, then make sure you have GAP insurance. That $40,000 car on the lot turns into a $32,000 car once you hit the road. If anything happens, the GAP policy will ensure you don’t owe anything more than what you paid for the vehicle + your deductible.
Buying a car is a serious undertaking, and a financial partner like Connexus can make the process much more enjoyable than being subject to dealer financing. Once you have the lender on your side, you truly get to enjoy shopping for the perfect vehicle.
Justin Estes is a member of Connexus Credit Union. He works as an accountant and an editorial contributor to Medium.com.