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