Hail Yeah!

I’ve never been a big car person. I can definitely appreciate a nice car, and certainly wouldn’t turn down a free Tesla, but I never felt the need to buy a really nice car. It’s fun riding around in new cars, but, for me, it isn’t worth the high price and monthly payments that come along with the experience. I realize some people are all about cars,  When it comes to money decisions, I try to be pragmatic and avoid blanket statements like “you should never buy a new car’ because I realize money can bring happiness when we spend it on the things we like. However, I'll show you how I recently benefited financially from driving older model vehicles.

A couple weeks ago, my city got hammered by a hailstorm. One of the downsides of living in our condo complex is not having a garage. We have a carport for one vehicle that protects most of a vehicle, while our other vehicle is left fully exposed (you can probably see where this story is going). The hailstorm came late at night (around 10:30pm) and lasted a good half hour. Surprisingly, none of our condo windows broke, after golf ball sized hail repeatedly pelted them. We were in bed when the storm hit, so we waited until morning to assess the damage to our vehicles. We own a 2006 Honda Civic and a 2002 Ford Ranger. The Civic was parked under the carport and was spared except for some dents on the trunk. The Ranger got dents all over, but thankfully only a minor chip on the window. Plenty of other vehicles in our area had broken windows and windshields.

My insurance provider, GEICO, brought in their catastrophic team to help handle the high volume of claims. They had a very easy and streamlined process for the vehicles which I commend them for. Up first was my appointment for the Civic. I’m not the best at estimating and I initially hesitated at bringing the car in because I wasn’t sure the cost of the repairs would exceed our $500 deductible. However, I decided there was no downside (other than spending time at the claims appointment) to at least getting an estimate, so I went for it. I am paying for the insurance after all; might as well put it to use. After about 20 minutes of evaluating the Civic, the insurance adjuster from GEICO went through the estimate. The hail had created $2,200 in damages (I told you I was bad at estimating). Without even asking, he presented me with a $1,700 check (cost of repairs minus deductible). He said I could take the vehicle to any shop I want to get it fixed. Alternatively, he said that because the car is paid off, I could just pocket the money. One of the benefits in not driving a super nice car is not worrying about a dented trunk. If I had a newer car, or a car with a loan, I would have chosen/ been forced to fix it. We are saving for a new vehicle, and I decided to put the money in our savings, and live with the dents. The way I see it, if someone would have offered me $1,700 to take a few whacks with a hammer to my trunk without damaging the paint, I would have gladly said yes.

The Ford Ranger had worse damage than the Civic and I figured it was totaled. I had looked up the value on the Ranger recently and Kelley Blue Book had the trade-in value around $2,500. Even with the additional damage, I figured I would get about the same amount as I did for the Civic since the value was pretty low. I’ll be happy to replace the truck when we do, but it’s nice having vehicles that are paid off. Our plan is to drive the Ranger into the ground, and replace it the next time a major repair comes up. 

About a week after taking the Civic in, I was back at the appraiser having the truck looked at. After the insurance adjuster finished he came over to let me know it was a total loss due to the $5,200 in repair estimates. With it being a total loss, the claims process is a little different and instead of getting a check right there on the spot, I had to wait a couple of days to get a call back from GEICO. I tend to estimate low in situations because I would rather be surprised and happy that I was on the low end. While I waited a couple days for the call, I decided that I would be happy with a $2,000 check for the call. 

When GEICO called, they informed me the appraised value on the truck was about $4,800, and presented me with two options. Option 1 was to get a check for the full $4,800 and I would be required to turn the vehicle over to GEICO (meaning I would have to buy another vehicle to replace it). Option 2 was to take $1,200 less ($1,200 was their estimate of the truck’s residual value), and get a check for $3,600 and be able to keep the vehicle. I fought the urge to go with option 1 which would've meant replacing the truck, and I went with option 2. I wasn’t going to let some cosmetic damage and an insurance check influence us into getting a new vehicle sooner than we were planning. Basically, the truck is house money. I’ve already got a check for more than I would’ve expected to sell it for when the time comes. Also, our state doesn’t require a salvage title for the vehicle, so I still should be able to get another $2,000 to $3,000 for it, when the time comes. I feel great about pocketing the money and being able to apply it towards the purchase of another vehicle when I'm ready.

For me, the experience reinforces why I’m hesitant to spend a lot of money on a car. I’m far happier spending my money on other things, and the less you spend on a car, the less you have to worry when things go wrong (this might not always be true when it comes to repairs on older vehicles). My experience was very different from a lady I overheard talking at the gym. From the bits and pieces I picked up in her conversation, I could tell she was very upset. She apparently had just purchased a new vehicle, and it was totaled in the storm. As is common when buying a new car, the value depreciated quickly and she owes more than its worth. She had to turn in the vehicle and write a check to the dealership, or be left with a severely damaged vehicle. She felt the her insurance company had failed her, and she was doubting her decision to buy a new car. I don’t blame her for feeling the way she did, and I wonder if her experience will change her views on buying new cars.

If you don’t have to have the newest model of car and you’re willing to put lots of miles on your car, you can free up money to spend on the things you are most passionate about. People should spend money on the few things they value most and cut back in other areas. Buying a car is where a lot of people make big financial mistakes by spending more than they should. My wife and I were able to come out ahead because we have two higher mileage vehicles, and neither of them are status symbols for us. Instead of letting the hailstorm get our mood down, we can excitedly proclaim, “Hail Yeah!”