Buying a New Car

After just under 11 years with my faithful vehicle, I bit the bullet and bought a new car this weekend.

Why did I buy a new car?

A few reasons.  I knew that my car was going to need some serious maintenance in the next few thousand miles.  There’s the standard maintenance and replacement that comes when your car hits certain odometer milestones.   One of the window motors was also going, which is an expensive fix.  Finally, the bumper and side mirror had seen better days and I wasn’t sure how much longer they were going to stay attached.

Yes, you could say I don’t treat cars as a status symbol.

So realizing that I was going to have to put more money into the car than it was worth, I decided to start researching.

Buying a car is very different from when I last purchased 11 years ago.  First off, it’s a whole lot easier to research, not only cars themselves but prices and dealerships.  There are a number of great sites out there that you can use to determine a good price on a new car with the features you want.  Dealers don’t have the ability to totally shake you down for a ton more money.  In fact, I think nowadays, the dealers make most of their money on bonuses from the manufacturers and not from the money they specifically make on your car.

There are a number of different sites out there that let you compare the cost of cars.  I think I used all of them.  I ran numbers.  I crunched numbers.  I also knew that I had a chunk of cash set aside to buy the car outright if that made sense.

One big key was that the initial numbers the salesman brought me were all about monthly payments.  I wasn’t worried about the monthly payment. I wanted to know bottom line.  So I sent him back to get me that information.  From my reading (and listening to This American Life), I knew that I was likely to get a better offer if I financed.  Doesn’t mean I plan to carry the payment for the full 60 months, but I wanted to know it was an option.  And once we crunched the numbers, it was clear that because of the kickback the dealership was going to get by having me finance, I was better off financing.  I made sure there were no early payment penalties and they just asked that I make the payments for three months so that the bank didn’t come back and try to get the bonus back.   For the discount I was getting, that was doable.

I went into the dealership knowing what I wanted to pay.  I knew what I wanted, and I managed to walk out of there getting pretty much everything I wanted.  So I’m happy.

Yes, I know new cars aren’t all that practical, but after doing my research, this was the car I wanted with the safety features that I knew were best for me.  So I went for it.  After all, if I’m only buying every 10+ years, I can treat myself.

Megan Smith

Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:

In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance.  It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information.  It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck.  While that was working for me, clearly I needed a better plan.

While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.

Except that’s not what an emergency fund is for.

So I did a lot of research, read a lot of blogs, and decided that I needed a plan.  I needed to budget.  I needed to know what I was spending my money on.  I needed to prepare for the future.

I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way.  I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.