Minimum insurance coverage on a financed vehicle. Does this sound fishy to you?

samer4samer4 Member Posts: 1

Apologies in advance if this has been asked already. I've been looking into buying my first new car and have been getting some conflicting info. I want to finance a used 2013 Fusion and based on research I've done, you have to buy full coverage insurance when financing a vehicle. Full coverage for me would cost $600/mo from my current insurer and $450/mo from Esurance. That's right, 2-3 times the cost of the actual car!! This is because I'm 22 years old and live in Dearborn, MI, perhaps the most expensive insurance city in the U.S... I have a clean driving record, excellent credit and a job at Ford as an Engineer but despite all that, a new car is unaffordable for me because of insurance.

Getting to the question now. I talked to a used car dealer about his financing options to see if he required full coverage. Turns out he doesn't offer financing in-house but goes through a bank. Naturally, I asked what the difference is between going through a bank they hook me up with and my own. He told me just go through mine, I could get a car cheaper that way. Fine. I told him my insurance dilemma. He then went on to say that I DON'T require full coverage after the first month. He said that the Sate of Michigan requires me to have full coverage to drive it off the lot but then I can downgrade the next month with no issue. He said that I can pay him $400 for him to extend his full coverage for the first month and then I would cover the car after that with minimum liability. Naturally, I asked if the bank would be ok with that and he said "Yeah of course we do it all the time. i just set up a deal like that with a 21 year old kid a few days ago". Sounds fishy to me. What do you guys think?

And to those of you who are thinking that financing a vehicle without full coverage sounds risky, you are absolutely right. The only reason I am considering this is because I do have the cash to pay for the car outright should anything happen and I wouldn't be in financial trouble should that situation arise. I would just prefer not to drop $20,000 in cash all at once on a car if I don't have to. I'd rather stick to my current car (which may just be what I have to do until I'm over 25 or move).

Sorry for the long post, but what are your thoughts? Am I right to think that this is a sleazy used car dealer just trying to make a sale? I'm going to talk to my bank about this tomorrow, but figured I'd pose the question to the community as well.

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