The following is a post by staff writer Crystal at Budgeting in the Fun Stuff. Her blog covers living expenses, saving for your future, and the fun stuff along the way.
When I asked my husband what personal finance experience sticks out in his mind, he immediately said “buying my car.” That was indeed a memorable deal. I’m also happy to talk about it since I was amazing, lol.
It all started when my husband decided that he needed a new car. Specifically, he wanted a small SUV that could easily handle all of his school supplies as a science teacher and sports officiating equipment at the same time. I physically cringed at the idea of owning an SUV since gas 2 1/2 years ago was reaching $4 a gallon around here!
Thankfully, he saw a Prius in our Kroger’s parking lot and was able to get a great look at its storage room in the back. He was hooked. That’s when I started looking into cost.
The Toyota Prius did not cost as much as I first guessed, but it was only a few thousand cheaper than the small SUV’s that were on our list. I never thought that I would ever need or want to buy any vehicle that cost more than $25,000, but he did need room and we do use his car for the majority of our driving. So I said nothing and continued looking up prices online.
By the time he had a free evening to test drive a Prius for the first time ever, I knew exactly what they were selling for ($26,000-$28,000), the Kelley Blue Book values of the 2008 models (about $26,000), what price I would be shooting for when he decided to buy ($26,500), and the APR we could get from my old credit union (4.5%). I thought I was fully armed.
I was not prepared for the fact that the 2008 Prius had a 200 person waiting list at that point. We were just lucky that a local dealer even had one to test drive. Sadly, it was a fully loaded model that they wanted $32,000 for after all the fees. It was also the ugliest reddish brown color that I had ever seen. It was supremely icky.
Once I figured out that they wouldn’t even negotiate due to high demand, I was ready to go. The salesmen scrambled to come up with something we might be willing to buy. They lucked out and found a 2007 silver Prius in the used car lot next door.
It was awesome. It had the same design, a few extras (like a back-up camera), and was still sparkly and clean despite it’s 30,000 miles. That was the rub. I had not researched used cars. I had no idea what it was really worth and Mr. BFS did not want to leave without that car. Of course, we should have left at that point and come back after doing a little research, but that wouldn’t have made such a good story, would it? :-)
Yes, we stayed. I offered something laughably low in that high demand environment – $16,000. They countered with $26,000. I rolled my eyes and suggested they actually work with me and offered $18,000. They came down to $24,500. I said I could absolutely go no higher than $21,000 (honestly, I would have gone for $23,000). They made their “final” offer of $21,500. All of that took about 2 hours and we finally were sent to the Finance and Insurance department.
That guy was awful. He tried to sell us on a 7% interest rate and a $2400 extended warranty. The Certified Pre-Owned beauty was already well-warrantied for another 70,000 miles, but I wanted to see if the interest rate had any wiggle room. I asked how low he could go on the APR if we bought the warranty. He knocked it down to 4.1%. I then asked for him to remove the warranty from the works. When he went back to adjust the APR, I explained that I knew that the APR wasn’t actually effected by warranties and that I’d like it to stay at 4.1%.
Needless to say, we didn’t make friends with that guy, but we did leave with a great rate at the time for a used car. :-)
When we finally were able to drive our “new” car home, I was dying to see how good of a deal I really made. When I frantically typed in all the relevant data into Kelley Blue Book, I was happily surprised to see that I paid $500 less than its “going rate” and a quick look at our credit report and a check-in with our credit union showed that our APR was pretty awesome too. I felt like I won the lottery until I realized we just signed away at least $23,000 in car costs and interest rate charges. Yuck.
In the end, we paid off the Prius by mid-2010 and ended up spending $23,400 total. It is still driving just like new and makes 50-52 miles per gallon, so I’m more than satisfied overall. My husband loves it and even said, “Cars are more fun to drive when they are affordable.” He has no idea how many hours I put into that, lol.
Tips for the Future
Here’s what I would keep in mind for my next car purchase:
- Research the price, options, and APR for new AND used just to keep your options open.
- Everything is negotiable, even APR and warranty costs. Keep that in mind.
- Don’t let your spouse ever say the words “Oh, I really like that one”. :-)
- Sometimes luck is better than skill, hahaha.
Have you ever gotten lucky on a big deal? Do you have any car buying experiences to share?