We Bought a Car--the Right Way
In the midst of the hottest days of summer and after two years of my husband driving an unreliable,
unairconditioned, 1990 GMC Jimmy, not knowing if it was going to make it to work or to my son's daycare, we
decided it was time to get a different vehicle.
We bought the clunker when we relocated back to the U.S., after my husband got out of the Air Force. We already
had a Chevy Blazer, and, not wanting two large car payments—we both were getting our feet back on the ground
and starting new jobs—we opted to find a really cheap second vehicle. At least there would be no car payment.
First mistake.
We bought the Jimmy from a private party, from someone my husband had worked with years ago. Second mistake.
The next day, the transmission died—no, I'm not kidding. Even though the seller reimbursed us for half the
cost of a new transmission, we still were out an extra $750.
After tons of repairs that over time cost more than twice what we paid for the vehicle, rust falling off when
we shut the doors, 146,000 miles, and another transmission slipping, it was time for a new car.
The search begins
Sure, we'd pass vehicles for sale in our neighborhood and see things in the
paper that would catch our eyes, but after our experience with the last private party we bought from, we opted to
take another route. This time we thought we'd purchase a new vehicle so we wouldn't have to worry about any
repair bills.
We were happy with our Blazer and the service at Thorstad Chevrolet, a local dealer in Madison, Wis., so we
started there. We wanted to work with the salesman who had sold us our Blazer. A friend of my in-laws, I knew Pat
would do his best to find us a vehicle—without haggling us on price. The trust of the dealership is what kept
us as return customers and Pat had told us, "I don't want to just sell you one car; I want to sell you five cars
[over the years]."
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"Lease payments depend on the residual value of the vehicle leased." |
We considered a minivan and thought one would be practical. We have a three-year-old son and we wanted extra
room for traveling. Of course a 2002 Chevy Venture was on the showroom floor. It was a nice-looking, big vehicle
with all the latest features, including leather interior and even a VCR. What we didn't realize—until we
started crunching numbers—was that it also came with a nice price tag of close to $30,000, which meant a
monthly payment of about $600 (depending on what we put down). We hadn't budgeted for that high a payment.
Leasing would cost less, right? Not always.
"Lease payments depend on the residual value of the vehicle leased," according to Pat . This means the lease
company determines what the vehicle will be worth when the lease is up—generally in two or three years. The
higher the residual value, the lower the lease payment. But you might end up paying as much for a lease payment as
you would a purchase payment.
"Leasing isn't for everybody," Pat adds. "You have to look at factors such as how many miles you drive a year.
You're limited to a number of miles per year and if you go over that amount, you'll pay for the extras, usually 15
cents per mile."
To help figure out if you'd be better off purchasing or leasing try Home and Family Finance Resource
Center's "Should I Purchase or Lease?" calculator.
When negotiating whether to lease or buy, make sure the dealer keeps the base price the same, Pat says. For
instance, if you're looking at a $30,000 vehicle and you negotiate down to $27,000, that's also what the dealer
should use as a base price for leasing.
We found that a lease payment on the van would be around $500, still more than we had
budgeted for a car payment.
We started wondering if a van was really what we needed—and wanted. After evaluating, with Pat, the
driving we do and considering how much we enjoyed our SUV (sports utility vehicle), we decided we didn't want a
van—at least right now. Maybe the next time, once we need to haul half of a soccer team around.
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We thought we'd purchase a new vehicle so we wouldn't have to worry about any repair bills.
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With that dilemma solved, we were on to the 2002 Chevy TrailBlazers. Boy were they pretty, but the fully loaded
ones also came with pretty big price tags of about $35,000, an even higher monthly purchase payment or lease
payment than the van. OK—so maybe we didn't need brand new.
Pat steered us toward several high-quality used vehicles, mainly lease returns. Many had new-car warranties
remaining or extended warranties available. A beautiful gold, 1999 Blazer, fully loaded, with only 29,000 miles,
sat on the lot. Did I want to test drive it? Of course I did. It drove great, had tons of options, and the price
was within our budget.
So, this was it. I got the information from Pat including the make, model, year, miles, options, and vehicle
identification number (VIN).
Financing options
The next day I visited my credit union and found out firsthand the
benefits of a credit union auto loan. My credit union offered very competitive loan
rates and no prepayment penalties in case we paid the loan off early.
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Credit unions generally offer very competitive loan rates and no prepayment penalties if you pay the loan off early.
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I gave the auto information to the credit union loan officer and found that the vehicle was priced about $3,000
less than what it was worth. The loan officer said the credit union would lend up to 100% of the vehicle's
value. She mentioned the option of receiving the full value of the loan (what the vehicle was worth, not just what
it was selling for) and using the excess money as needed for other bills. She filed our application and
preapproved us for the loan.
Covering your acquisition
We were preapproved for the loan, I loved the vehicle, my husband liked
it—we wanted it. It was the right price, had the right options, the right color. It was sold—to somebody
else.
I was devastated. Now what?
About a week later, Pat called and told me about a 1999 Oldsmobile Bravada on the lot, much like the Blazer
that slipped through our fingers. Being a GM model, Thorstad still could service it. I previously had glanced at
it, but wasn't sure about the price. It cost more than the Blazer but the dealership would work with us. Plus,
there were 11,000 miles/eight months left on the warranty—because it had 10,000 fewer miles than the Blazer
had.
Back to square one. I quickly called the credit union to see
what the Blue Book value was. The value again was more than the asking price. On to the test-drive.
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It was sold—to somebody else. |
It still looked and smelled like new. With my husband's Jimmy barely running, we feared if we waited we might
miss out on this one too. We bought it and got an almost new car for much less than a brand new model, plus
$400 for the Jimmy.
It drives great. We actually like it better than the Blazer we had our hearts set on.
By the time we're ready to make our next vehicle purchase maybe we'll be ready for that minivan. Or
maybe we'll feel more comfortable with a much higher car payment. But until then, we're happy with our purchase,
though my son still tells me he wants a car with a TV in it.
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