Paid in Full

May 21, 2003

Yesterday I mailed away the last car payment for the Trans Am, effectively
completing both the largest and dumbest purchase of my life in one fell swoop.
Let me explain.

My Trans Am was the gift I gave myself for completing college. I researched
it for months. A Super Bowl commercial first brought it to my attention.
The Firebird had a sexy new body. And it could eat other cars.
I had to have one.

I was very surprised to find that it fit within my price range. Somewhere
along the line I had determined that I would need about $20,000 for
a nice, reliable car. The base Firebird barely missed that mark.
The Trans Am, basically the Firebird with everything, was still within
sight. I could swing it. My living expenses were suddenly much below
my salary.

The test drive sealed the deal. Fifth gear, fourth gear, third gear –
it’s all good at fifty five miles an hour. My current car at the time,
a 1979 Mercedes 240D, only made the trip more impressive. It couldn’t hold a candle to this rocket ship I was driving.

Negotiations went smoothly, despite the fact that some factors worked against me. The spring air meant I had lots of competition for a rapidly decreasing pool of available cars. My requirements, T-tops and a manual transmission, only made the situation worse. You wouldn’t believe how few Trans Ams come with a stick between the car’s front seats. We have a gold one in Indiana. Want to pick it up?

I paid well below sticker price but the price itself was not the issue. The issue was the financing. At the time, I thought I had two choices: spend the summer saving for a sizable down payment or accept a hefty car payment. The dealer presented me with a third option, called a balloon payment.

A balloon payment essentially means that you pay off only a portion of the total amount over the length of the loan, waiting to pay the rest until the end. There is a piper to pay and it is your very last payment. The upside is that your monthly payments become more manageable. The downside is that you accept an interest rate hike in addition to still having to face your worst fears at the end. (I should note that there are options other than paying the a large sum of money at the end of the loan, including selling your car back to dealer for what you still owed them. However, these options weren’t on my radar screen. I wasn’t renting. I was buying.)

On that day, a balloon payment made sense. Instead of spending the summer saving for a down payment, I could save for the balloon payment. It would be sort of a down payment in reverse, with the added bonus of T-tops all summer long. I signed on the dotted line and regretted it only a month later.

I won’t share the details – those close to me can probably figure it out – but things changed. I wouldn’t be able to stash a large sum of money away on top of my car payment. It just wasn’t going to happen. I could, however, make my payments and add a bit on top to ensure that when piper came knocking, it was only a light tap. I’d have the large monthly payments that I abhorred along with the bonus interest rate. Lucky me. Sometimes I would remind myself that I drive my dream car to work every day. It helped.

I’ve debated that purchase many times over the years
and one moment always comes to mind. Early one morning after no more than
three months of payments, I was driving to work like I always do, heading
down the speedy lanes of interstate 95. Suddenly, a car in the far
left lane swerved into mine at a sharp angle.
I reacted by immediately darting one lane to the right and moving very quickly
back again to avoid a sure accident with the car on my left and a car
already to my right. The incident took less than a second at over
70 miles an hour. In that second, the wheels of my car screeched in protest
as I spun the wheel to one side and the other.

I remember thinking quite clearly that my Mercedes could not have made
that maneuver. This machine, whose payments I had already begun to lament,
may have saved my life. If that is true, it was worth every penny,
financing and all. Every penny.

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One Response so far | Have Your Say!

  1. Mom
    May 21st, 2003 at 10:45 pm #

    Just catching up with my reading. And yes, it was worth every penny. Love, Mom

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