How I almost bought a new car

I’ve been side-tracked from my Spain trip travel log by blatant consumerism.

Late last week I was sitting in front of the TV one night finishing up some work between watching my favorite shows. (I love 30 Rock! I’m also fond of Parks and Recreation and glad it’s back on the air.) A commercial came on for a national Toyota sales event — 0% financing on the 2010 Prius — and my interest perked up. With a laptop so close at hand (when isn’t one pretty much attached to me these days?) I could investigate this a bit more online, and I did.

I started looking up the specs, which meant visiting car sites like since the Toyota site was featuring the 2011 Prius information by now. As I investigated more that evening and at odd times the next day I was getting a bit excited. A new car! A hybrid that would make visits to the gas pump a rare event! Fun features like Bluetooth for my phone! And that 0% financing…well, that was sweet!

My current car (a 2002 Saturn wagon) was purchased during a 0% financing event. Back then I was driving a Saturn S sedan that I had purchased new with financing somewhere around 8%. I had one year left on the loan and was glad to trade up to a more luxurious car and not pay any interest at all. I was in the dealership getting standard maintenance when I saw the 0% event and it didn’t take long for me to get very interested in one of the two remaining wagons they had on the lot. I ended up coming back the next day to buy the car. My credit was so good that I had no problem qualifying for the financing (over a 60-month period) and I declined to put any additional money down other than my trade-in. I’ve been quite happy with the car and made my last payment a few years ago. It’s nice being free of a car payment.

Over the past two years I’ve had to pay out a bit more for maintenance than the standard oil changes, tire rotations, and filter replacements. The battery died and the car had to be towed out of my garage to a mechanic so it could be replaced. The brakes were replaced. An oxygen sensor was replaced. The airbag light came on and some other sensor had to be replaced. I bought new tires last fall, and I’m now potentially looking at some power steering repairs that will be in the triple digits. For a nine-year old car, none of this is completely out of line, though. And let’s say it again: it’s nice being free of a car payment.

My driving habits are so minimal that I’ve actually considered living car free. My nearly nine-year old car has just over 40,000 miles on it. I live in a big city with public transportation and a dedicated bicycle lane steps from my house. I easily get to and from work on the train and only really need the car for trips to the suburbs to visit friends and relatives. I do enjoy the convenience of a car for shopping (I can buy all the heavy canned goods I want at the grocery store in one trip!) and for getting to places in the city at least twice as fast as public transit can move me there during non-peak traffic hours (at peak traffic hours public transit and private transit are pretty much equal in speed, with public transit trumping private transit on cost mainly because parking is so expensive in the business district). My dog walker gets by with just his bicycle all year ’round, and I have one friend who gave up her car over a year ago and gets by with public transportation and a car sharing service. (We have two in Chicago, iGo and Zipcar; unfortunately neither offers cars in my neighborhood.)

I was with some friends on Friday night and I floated the idea of me buying a new car to them. One of these friends purchased a new car just a few months ago. In her situation, it was a necessity: she has a reverse commute (from city to suburb) and her previous car was 12 years old with high mileage and getting more and more unreliable. She had done lots of research on cars and found that it was a pretty good value for her to buy new, so she’d taken the plunge. The other friend is driving an older car that is also starting to have lots of critical and pricey mechanical issues that are unaffordable for her to fix. Both of them had the same response to my idea: don’t do it.

But I kept digging and researching and learning what I could about the car over the weekend. Because I regularly read personal finance blogs I’m fairly well-informed about other people’s car buying experiences and what I can learn from them. While I understand that buying a new car is never considered an investment, my thoughts were turned to considering a new car mainly because of the unknown maintenance costs looming in my future. What if the timing belt needs replacing? What if the alternator goes out? What if the A/C stops working this summer? Buying a new car moves you away from concerns like this. (Yes, there are new cars that are lemons, but there are also warranties and laws to give you some protection.) The interest-free financing made the fact that I don’t have enough saved to pay for the car in full with cash a bit more palatable. I could pay some of the purchase price from a targeted savings account where I’ve been putting aside funds for car replacement and finance the rest without feeling ripped off.

So after thinking about it some more and talking about it some more, I decided to visit a dealer and go for a test drive last night. (Toyota’s free standard maintenance for two years or 25,000 miles was the final nudge, I think.) B came along for the fun, and also because it’s usually a good idea to have a guy with you when you’re a woman buying a car. (Sure enough, the salesmen went first to B, who graciously said “Talk to her.”) Yes, the technology on these cars is fun. B is one of those folks who really loves electronics and gadgets and he was into all the whiz-bang stuff like the navigation system and the back-up camera on the test drive model. In my research I knew that this level of gear blew the car completely out of my pricing comfort range, though, so I tried to concentrate on the driving and riding experience.

Then it was time to sit down and start the dance around pricing. I had sent out some emails to a couple of dealers — including this one — so I knew that it may be a little more difficult than I thought to nail down the trim level I wanted. The 2010 Prius came in several trim models, and I was interested in a mid-range one (referred to as a III) without the fancy navigation system and sunroof. While I was driving to the closest dealer for a test drive last night another one phoned me to tell me he had no 2010 Prii left at all, in fact.

The test-drive dealership had a III, but it had the navigation system and would cost more than a IV they also had available that did not have the navigation. OK, how much was the IV? Total price was just over $30,000 with all the taxes and fees. I looked over the estimate more closely. The base price was MSRP, a “documentation fee” of $760 was added on, as were floor mats and another mysterious “doc fee” of nearly $200. Then there were all the things that were pretty much set: taxes and registration fees. I pointed out that they were only showing the suggested price to me, and the salesman quickly showed me on his computer screen that their invoice price was only $1,000 lower. Right. (I had info from more than one source that the invoice cost was more like $2,000 lower.)

After a bit more back and forth where I basically said I just could not pay that much for a car and would check around with other dealers the sales manager came over and tried to fear sell me. Hadn’t I heard about the terrible tragedy in Japan? Didn’t I realize that this meant scarcity of these vehicles? I pointed out that I was looking at a 2010 model and that those were no longer being built. He countered with the increase in gas prices and how much more kind I’d be to the environment. I came back with how I drove so little that gas prices didn’t really affect me and that the environment was better off by me taking public transit every day and riding my bike. I stood up and closed up my coat. They threw out a bone: they’d knock $500 off the price. No thanks.

Maybe they will sell all of the remaining 2010 Prii (isn’t the plural of Prius sort of goofy?) now that gas prices are increasing and the auto manufacturing disruption of the earthquake and tsunami ripple through to affect the 2011 Prius production line. Maybe others will be willing to pay the suggested price plus the extra padding of “documentation fees” to this dealer. When it came down to it, I just couldn’t stomach paying so much for a car and again taking on a monthly car payment. Even if I don’t have any financing costs.

14 thoughts on “How I almost bought a new car

  1. did come dangerously close to buying a new car.

    It does seem like a big waste if you could live car free. I don’t live in a big city so I need a car.

    I’m impressed that you walked away. They certainly didn’t deserve your business. I really hate the car buying process, especially if it’s from a dealer and not a private sale.


  2. From what you’re saying it doesn’t really sound like you need a new car. But it does sound like it might be time to start putting some extra money aside for a new car in the future so that you won’t have a car payment when you do take the plunge (or you can take 0% financing and have the money at hand gaining interest to pay it all off when the 0% part is over). By the time you’re ready who knows how amazing technology will be.

    Don’t forget that your insurance costs go up when you get a new car.

    Also, definitely ask for the “walk-away price” when you’re negotiating and comparing.


    • Very true; I don’t really need a new car. But it’s hard to resist the temptation sometimes! I did check insurance prices and it would be only about $80 more every 6 months. (Which makes me think I need to adjust my insurance since it’s likely I’m over-insured on a nine year old car.) There does seem to be quite a market for these cars in the Chicago area. I couldn’t resist checking inventories of dealers within 100 miles throughout the day so far and there are not a lot of 2010 vehicles remaining. Most of the remaining ones are top-of-line, fully loaded models, and therefore more expensive. What is it about a perceived scarcity that makes one prone to want to jump? Despite the fact that I don’t need the car, I’m still wavering on whether I really made the right decision walking away from it.


  3. You made the right decision!

    There will be more cars in the future. If you replace a car when you need to replace the car rather than when you’re conditioned to think you need a new car payment, you will save SO much money. You don’t need a 2010 this year, you can have a later model car in a future year.

    Seriously, what do people spend the most money on? Housing and cars. If you can get reasonably priced housing and never make a car payment you will be WAY ahead on saving for and spending on things that really matter. Start saving up for a new car– that way you won’t have to owe money on a depreciating asset when the time comes to get a new car.

    Impulse spend on some fancy cheese at the grocery store instead! That’ll save you tens of thousands of dollars. Heck, you could get some good walking shoes. Or a Frogg Toggs Chilly Pad Towel for biking in the summer.


    • Thanks for the reassurance! I have been saving to replace my car when it finally dies, but I could comfortably only part with about half the price of the Prius right now; certainly not enough to buy one outright, which was why the special financing was so seductive. Even though I could likely get by without a car in my garage full time, having one makes it so much easier to visit family and friends so I’m likely to have a car for the foreseeable future. Of course if B moves in to replace my roomies, it’s possible that I could pay him a bit here and there to share his car if mine totally broke. At least I’m *thinking* about all these angles and not just *acting.* That’s good, right?


  4. With luck you will have the entire amount for a new car when the old one dies. At the very least you’ll have more to put down. And you won’t need to care so much about financing deals.

    And yes, being a one car couple in the city isn’t too bad, especially when the city has good public transportation. It would be silly to buy a new car now when you don’t actually need it, only to realize you don’t need one later either. Holding on to your current car is a much safer strategy.

    Stay strong and keep saving!


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  7. You are a brave lady. Brava! Like everyone else, you’re doing fine with your car. I’d DIE for a nine year old car with $40k miles on it.

    Have you looked into trading your car up in Craigslist? I have a friend who does this regularly. He’s actually made money in the process. It’d be interesting to see what responses you get though.


  8. I have read that “0% finacing” isn’t really 0%. The “free” financing is made up for somewhere else – i.e., higher car price. Although, with Saturn that supposedly isn’t true. What was your experience with that? Was the price on the car the actual price regardless of financing and trade-in?


    • Saturn had a different sales model, as most people may remember: the sticker price was always the sticker price. Actually, I didn’t find that to be entirely true. At the time I bought my Saturn my employer had a GM “employee discount.” I don’t work for GM, but my company does a lot of work with them and it was something offered to us as a perk back then. I used that discount to knock down the price of the Saturn AND got the 0% financing. I’m sure the trade-in price of my previous car was undervalued, but at the time I wasn’t able to support two car payments nor did I have space for two cars, so that was a concession I was willing to make. In the end, the dealer made an acceptable profit and I got a good car for a pretty good price.


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