After being laid off from her job at a technology startup last year, my wife decided to go back to school to start a new career. With the loss of her income, we had some tough decisions to make, including moving into a cheaper apartment, and trying to cut our monthly costs as much as we could.
When it came time to buy a car earlier this year, we wanted to be just as fiscally responsible. For a car guy like me, it wasn’t easy. But we set out a plan and got a car we both love at a price we could live with. Here’s how we did it:
Step 1 – Setting the budget
First we had to know how much money we wanted to spend on the car. We did this by looking at our savings and debt combined to come up with a rough number of what we could afford out of pocket. We were lucky enough to have the amount at hand, but if we hadn’t, we would have set a monthly payment up to go from our checking to our savings account for the car fund until we reached our purchase amount. Ultimately we settled on $10,000.
Next, we had to know how much money we wanted to spend per month. Even on a car that’s bought and paid for there are gas, maintenance, insurance, and sometimes parking fees that you have to pay. This is where a lot of car buyers (myself included) get into trouble. Here is our monthly breakdown:
Gas – $42.85
(300 miles per month ÷ 21 mpg) × $3 per gallon = $42.85
Maintenance – $50
Oil changes (2 per year @ $50)
Annual tune up (1 per year @ $500)
Insurance – $100
So on a monthly basis, we expected to pay somewhere around $200 for the car.
Step 2 – Selecting a model
The first step to finding a car was to consider what we would be using it for. Certainly road trips are important. And we love going camping. We’re also thinking about kids, so it has to be big enough to hold a family and safe enough for the most precious cargo. We both agreed we needed a crossover or a sport utility vehicle.
Our next step was researching. We used Edmunds and Consumer Reports for reviews. It’s good to read the reviews both from when a car was new and from now to see how they’ve held up. We found that the Subaru Forester was the best car for us. The 2004 model was right in our price range.
It’s a good idea to find online forums for the car you’re considering. Most of the people on these boards are huge fans of their cars and some are reluctant to say anything disparaging about them, but it doesn’t take a lot of research to see what some common problems may be. After reading about some issues with the turbo, we opted to go for a naturally aspirated engine.
Step 3 – Finding the car
As a former car salesman, I would never never never buy a car from a private individual. Dealerships may have a seedy underbelly that isn’t exposed to the buyer, but they’re a much more reliable source for a used car. They’re not going anywhere, and if you have a problem with the car they will usually be reasonable and helpful to make sure you’re happy. The reason? They want you to come back! They also know that an unsatisfied customer is always vocal about problems. Happy customers make for more referrals.
We looked for our model at a bunch of different Subaru dealerships around us (nice thing about New York is there are a lot of them). Finally, after about three weeks, we found the perfect car. The website even had the CARFAX available for free. Everything checked out, so I called the dealer and told him to put a hold on the car.
Step 4 – Buying the car
Negotiating the price of a car is a nightmare for some people. Just stay calm and keep in mind what a fair price for the car is. The dealer is in business to make money, so keep in mind that fair means they will be making money. Check with Kelly’s Blue Book to see what the dealer price will be.
Our price was just under where Kelly said it should be. The car had some slight, but reasonable wear and tear, so both we and the dealer were happy with the price we settled on.
We also bought an aftermarket warrantee. We were buying a car that already had 90,000 miles on it, so the peace of mind that comes from a three year warrantee that covers almost the whole car and allows us service at any Subaru dealership was worth the few hundred dollars we spent on it.
Finally, we met the head of the service department. Having our car serviced by Subaru certified mechanics using Subaru OEM parts will keep the value of the car up and we won’t be so worried that anyone’s cutting corners with our car.
I hope this helps anyone looking to buy a new (to you) car. Good luck!