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How to Buy a Car – Our Personal Experience

You may remember my post, How to Sell a Car on Craigslist.  I learned how to do that that simply because we had bought a new car and the dealer offered us way too little for our old car.  This  post is about our car buying experience and the great tips on how to buy a car again in the future.

How to Buy a Car – The Beginning

It all started when my husband decided that he needed a new car in early 2008. Specifically, he wanted a small SUV that could easily handle all of his school supplies as a science teacher (this was before he became a school librarian) and sports officiating equipment at the same time. I physically cringed at the idea of owning an SUV since gas 3 years ago was reaching $4 a gallon around here!  Heck, it’s at $3.25 a gallon right now so I would have been cringing for the last 3 years!

Thankfully, he saw a Toyota 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 pricing for a new Prius.

The Toyota Prius did not cost as much as I first guessed, about $28,000, but that 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 car that cost more than $25,000, but Mr. BFS did need room and we do use his car for the majority of our driving. So I said nothing negative and continued looking up prices online.

How to Buy a Car – The Purchase

By the time Mr. BFS had a free evening to test drive a new Prius for the first time, I knew exactly what they were selling for ($26,000-$28,000), the Kelley Blue Book values of the new 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 Toyota 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 we didn’t.

How to Buy a Car – The Negotiation

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 4.1% rate at the time for a used car. 🙂

How to Buy a Car – Results

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 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 used our emergency fund to pay off the Prius by mid-2010 (remember that super happy We Just Paid Off Our Car Loan post?) 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 research, lol.  This is also when I learned s few of my tips for selling on Craigslist.

How to Buy a Car – 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 car financing 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.  Seriously.

You may remember this post since it was one of my staff writer posts at Sweating the Big Stuff last year.  Don’t worry, I did get permission to reprint here.

Have you ever gotten lucky on a big deal? Do you have tips on any car buying experiences to share?

Cars are a BIG budget decision. Do you go with a used car? Do you buy a new car that depreciates when you drive it off the lot, but it comes with a warranty? Figuring out how to buy a car that works for me and my family is a priority right now and I'm learning everything I can before I go to the dealership and face the car sales people.

FYI:  I worked at a dead end cubicle job from 2005-2011 for about $30,000 per year.  I went self-employed in July 2011 and make between $70,000-$90,000 through blogging, professional pet sitting, hubby's reffing, and our rental home.  If you’d like to start your own site (link to my free step-by-step guide), I highly suggest checking out Bluehost (my referral link with a nice discount for you, PLUS a free custom header banner from me!).  Please contact me any time at budgetingfunstuff*at*gmail*dot*com with questions or just to brainstorm! I’d love to help!
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17 thoughts on “How to Buy a Car – Our Personal Experience

  1. Your experience certainly worked out well in the end! I guess these situations is where having a smartphone/ipad would come in handy. (“Excuse me, I have to run to the ‘bathroom'”. Then you just do a bunch of quick research.)

    I drove a Prius as a rental car and really liked it. The only thing confusing to me was it was so quiet, sometimes I didn’t know if it was on or off!

  2. Thank you for posting this! Yesterday my Bro-in-law worked on my car…and he gives it a few months to live 🙁 I’ll need a new car by June at the latest, so I’m going to start researching. I’d already decided to buy used, perhaps 2-3 years old and hopefully a loaner or just off-lease. I’m even going to check rentals at Enterprise. Thankfully, I have some money saved to use as negotiation if my current clunker doesn’t get much via trade-in. I’m hoping for less than $10K.

  3. Very useful information, Crystal. I agree that, when buying a car, it’s important to leave options open. I have never bought a new car, for example. All of my cars have been fairly valued and very well kept used cars with 2 or 3 years on the road. I’ve had no problems with any of them, so I’ve probably had my share of good luck too.

  4. The best car-buying strategy I’ve seen happened when I sold my car, to a very skilled buyer: He text-messaged me and named his price, sight unseen. I said no. Weeks passed by. I texted him back and made a counter offer. He countered my counter. We agreed on a price. THEN only did he come out to look at the car. If he didn’t like the car, he could still walk away — he didn’t HAVE to buy it. (And on my end, I didn’t HAVE to reserve it for him.)

  5. Wow, you did a great job on the negotiation. My tip is to bring a friend who has no stake in the car. Don’t get emotionally involve or else you’re at a disadvantage. 🙂
    Great gas mileage by the way.

  6. @Everyday Tips, ah, yes, a smart phone would have been nice! And yes, getting used to the very quiet Prius took a few weeks. 🙂

    @Evan, I enjoy negotiating – it’s fun!

    @krantcents, with the right research, car buying doesn’t have to stink.

    @Jenny Dee, you can get a great car for less than $10,000. I am personally looking into a used Toyota Yaris since they can get 35-40 mpg. 🙂

    @Finanzas Personales, I am glad to hear happy used car stories since it means our Prius have a fighting chance.

    @Sunil, so far, the Prius really has lived up to its hype! It is a great car!

    @Afford, that’s awesome – sounded easy! Congrats!

    @retireby40, great tip! Yeah, we love the mileage.

  7. You, Ma’am, have a great career ahead as a professional Buyer, should you decide to take the opportunity. Negotiating skills of this caliber are born, not made.

    And your sentiment is exactly spot on, anytime anyone except the buyer opens their mouth, it costs money.

    We’re still driving 10 year old vehicles, but we’re leaning towards a new (used) one soon. Our strategies were fairly simple: after research, we knew what we needed to pay. We showed up for our return visit tothe Toyota dealership with a certified check that was 3% over dealer cost for that particular model and options of Toyota Corolla. It was basically a take-or-leave-it deal for the dealership. They took it.
    My truck we bought on Ebay, again with a set bid limit. I think I was shilled at the last minute, but no matter, we still paid what we wanted to, about 25% under lot price for a 2001 3-yr old Ford F150.

  8. I always had the family plan discounts, which are supposedly non-negotiable… do you think that is true? I hear that from employees who have had Ford, GM, Chrysler cars all their lives. Ive always wondered, and never have found anyone that got a deal below it.

  9. @101 Centavos, if my blogging career doesn’t work out, professional buyer here I come! 😉

    @MoneyIsTheRoot, it depends on the family discount plan. Some of them are truly just a tiny bit above the dealer’s cost or even a tiny bit below cost, so they cannot get any better. Some of them are 3%-5% over dealer cost and can be negotiated down. Plus, buying a used car will beat new car prices almost every time anyway. 🙂

  10. There is a really good site for buying cars called Autoebid. It works as a reverse auction, so you pick how much you want to pay for your car and they will try and save you money. I know it sounds too good to be true, have a look for yourselves

  11. Pretty incredible topics! I agree that, when buying a car, it’s important to leave options open. I have never bought a new car, for example. All of my cars have been fairly valued and very well kept used cars with 2 or 3 years on the road. Thanks! 😉

  12. People love cars … but hate buying them. Articles like this one are sorely needed to help put car buyers on equal footing with the dealers. If it’s permitted, I’d like to suggest another article that I think is particularly helpful for those people looking for a new car: How To Buy A New Car

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