How I Decided To Buy A New Car

Now I realize I am going into dangerous territory here when I try to defend myself when I decided to buy a new car on a personal finance website.  Especially when I wrote a guest post a couple months ago talking about the benefits of buying a used car!

Yes, I had done my research, crunched the numbers, and came up with the idea that a 1-2 year-old used car (specifically a Hyundai Elantra) was the way to go.  I wanted something that was durable, fuel efficient, inexpensive and that was it.  I compared the numbers on new cars and thought that I would have to see one get below 17K before I would consider it and since I wanted A/C, cruise and an automatic transmission, that wasn’t going to happen.  So how then, did I get convinced to go with the idea to buy a new car?

How Did This Happen?

Well a few factors went into it, and I’m still not sure it was the right decision, but I am rationalizing it mostly with the idea that I paid a premium of a few thousand dollars as a treat for myself and some peace of mind.  The very first thing I found when looking for used-cars in the compact/small sedan (can we really call some of these cars compacts anymore?) class was that any reliable brand name was going to cost you quite a bit of money, and there was definitely not the wiggle room that there was in years past.  For a 1-2 old Corolla, Civic, or even Elantra, the lowest I could find was 12.5K, with a few private sellers going below that on cars that had substantial mileage on them.  I talked to a couple of guys I know in the car industry and they said that the lack of negotiation room wasn’t my imagination.  Apparently too many people read my post and have been buying used cars :).  With used car sales going up across North America, dealers have way more leverage when negotiating prices.  I learned this was especially true in the small car classes that are the domain of frugal individuals to begin with.

My Acknowledged Inadequacies…

Then I started to consider my rural position and vehicle repairs.  I have a GM dealership in my small community, equipped with full-service GM garage.  I believe in supporting local businesses when I can (for instance I do all my grocery shopping here, despite paying about a 5-10% premium to do so), but used GM products just don’t have a great track record to say the least.  The nearest city is just over an hour away and it has dealerships and garages for all the major car dealers.  I have always been self-conscious about my lack of automotive knowledge.  I know how to change my oil or clean spark plugs, I even have a decent understanding of how a car works, but I am clueless when it comes to actually finding solutions to mechanical problems.  Before I recently moved I had numerous friends who were mechanics that could help me out if I ever had problems so I didn’t worry about it.  Now I’m at the mercy of whoever decides that I have a “transmission problem that will require extensive work.”  So the theory is that a new vehicle will not only break down less, but will have 5 solid years of bumper-to-bumper warranty on it.  Also, I know that I am a maintenance freak with my vehicles because I hate the inconvenience and powerless feeling of bringing my car in for repairs; consequently, I like knowing that the vehicle I’m driving has had the maintenance done exactly as the manual recommends and that I will get the maximum potential out of the car.  A lot of the 1-2 year used cars were off of leases and had 30-50K on them.  You have to wonder how people treated those cars if they knew they were only leasing for a year or so.  You can do a lot of damage to an engine if you only give it a couple oil changes and don’t break it in properly over the first 50,000 km (even if the damage will only come into play after the 50,000 km that would still be left under most warranties).

Buy A New Car – Because Its “The Car Buying Season”

With Spring/Early Summer being the biggest car buying seasons of the year, every dealership out there right now is competing with “employee pricing” and “0% financing.”  With all the dealerships putting their best foot forward I actually had more leverage here than in the used car market!  I test drove all of the major players in the class including the Nissan Sentra, Toyota Corolla, Honda Civic, and my two finalists, the Hyundai Elantra (2012) and the Chevy Cruze (2011).  I found they were both slightly smoother than the other 3, got at least as good mileage, and had great consumer reports reviews.  To be honest, the Cruze made my cut-off mainly because of the GM being right next door.  Even with the GM employee pricing and nothing special on the new Elantra (it wasn’t included in their 0% for 84 months deal, in fact the 2011 model wasn’t either, that’s how popular the model is right now) the pricing was very comparable.  The “middle-of-the-road” models with the automatic transmission, A/C, and cruise were almost exactly the same price.  While I was impressed that GM has finally released a competitive product in the small sedan category, the Elantra was just a much better fit for me.  As an added bonus it came with a passenger heated seat (the Cruze only had for the driver) which was a big deal for my significant other.  The Elantra just had a bit better mileage, a better warranty, and had better styling (check out the interior).

The 2012 Hyundai Elantra Was The Clear Choice

Even without having any special deal on, I thought the Elantra just made sense at the price I paid for the satisfaction it gave me.  I ended up getting the car for $20,200 with mud flaps, a block heater, and a couple other goodies installed (I even got a “free” coffee mug thrown in by the dealer after claiming that I thought I seen it in the fine print haha).  After a lot of “going back to see the manager” I also got a 2.99% interest rate, which was a lot better than the quotes of 6-7% I was looking at on a used vehicle.  Although it kills me to pay interest on a car, I did my homework before I left and found that it added just over a thousand dollars to the overall price once my down payment and amortization period were factored in.  I can live with that.  With the extra taxes, interest, and difference in original price, I figured I paid about an 8K premium to own a new car.  You can probably take a couple of thousand off for mileage savings (it actually does get the 40 mpg highway mileage that the EPA measure it at, and that’s before the engine gets properly broken in) in the next few years, and maybe a thousand in repair costs I’m saving.  So I paid 5K solely for the enjoyment of having a brand new vehicle that I really like (after 3800 km I would highly recommend it), that has a great warranty, only had 5km on it at purchase, has superb consumer ratings, is one that I plan to drive until it dies, and I got to customize to exactly what I wanted including a great color (very important to the GF).

I am secure that I made decision that cost me more than it had to (even though it’s tough to see that money taken off every month), but was worth the benefits it provides to me.  So for me, buying the new car made sense right now.  Has anyone else out there taken advantage of the “new car season” or got a great deal on a used vehicle?

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Do it!! I must say, I love the new car smell (though I shouldn’t because its probably toxic to us LOL).

I think you are in a good place, your mortgage is so small, the car payments would be pretty miniscule on top of that, I’m sure.

If/when I get my next car, I will make sure that it is a hatchback. I tried to stuff my bicycle into my car the other day and it did not go so well.

I think I got a pretty good deal when I bought my new 2007 Honda Civic LX. I did all my negotiating over the internet. It’s more efficient that way. Before doing my research, I’d decided on a used car. I changed my mind once I discovered the interest rates on used car financing were higher than those for new car financing. Not every car depreciates 20% the moment you drive it off the lot. (I really wish that myth would die.) The cars that interested me, e.g., Honda Civic, Toyota Corolla, held their value really well. So, after factoring… Read more »

I liked the conclusion in your guest post better. ;)

Did you have a trade-in? Was it an option to keep that longer?

I agree with youngandthrifty… there is nothing like the smell of a new car. I once had a car so old, but I couldn’t afford to replace it, that I gave it a good clean and then bought that “new car smell” spray. It kinda’ changed my perspective on my old beater.

From your Summer Yakezie group member.

I think that as the economy does what it’s doing, more and more people are going to be looking for a good used economical car. That being said, it’s going to get harder to find a used car in that class for a decent price. I’m not saying I would buy a new car, but it’s going to be a lot harder to find a used one that will fit the bill.

We bought our new car at the absolute worst time to buy- its a VW TDI bought the year that the diesel rules had changed and VW wasn’t selling any current year model TDIs. In fact, TDIs had sold out in our state, but the dealer we went through shipped some in from out of state. Our choices were limited to exactly what the dealer had in stock, and they were popular enough that there wasn’t going to be much negotiation. Still, we went with 3 year, 3.9% financing (which then almost killed us when the husband lost his job… Read more »

I’ve always loved the car, and yes, its definitely worth it not to have a car payment and still have a fairly new car. Still, on some level, the car won’t be “worth it” worth it until we hit the 15+ year mark on driving it. (Compared to the other car we were looking at at the time.) Still, that’s the reason we went with a diesel. Neither of us likes car shopping and we wanted a car that would last us 20+ years.

Barb Friedberg

No apology is necessary. We have bought new for many years and still made the entire car buying process economical. Our 2003 and 1998 models attest to it! And we’re not looiking for a new car any time soon.

Teach-

All of my economics professors in college drove vans made circa 1980. I have since tried to adopt their philosophy (not to pour $$ into a depreciating asset) but with every summer that goes by I keep second-guessing myself. I drive a 2001 Jeep Cherokee which I was planning on driving til it dies BUT if a new car will boost your productivity, boost your confidence, or boost your quality of life – it’s worth it.

We bought new for years and kept each one for years. I bought my last one used and am just as happy with it – and the taxes were lower!

Congrats & Welcome to the Club! :)

We utilized Car Negotiation Coach’s strategy (another yakezie) to purchase our new Hyundai Sonata. It worked out like a dream and even wrote an article summarizing the experience.

Hope you enjoy the vehicle – the revamping of the brand has really impressed us thus far.

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