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Drive Buy

William Ehart

THOSE OF US WHO aspire to be shrewd investors try to buy when opportunities present themselves, while avoiding “crowded” trades.

I broke that last rule when I recently bought a second car. Yes, prices are skyrocketing as a result of supply-chain bottlenecks and strong consumer demand. But I had a good reason: My son’s entering the fulltime workforce—and he’s taking over use of my current car.

It was the worst time to put myself at the mercy of car dealers. I knew I’d overpay by thousands of dollars. Yet, given the circumstances, I think I did pretty well.

First, I had saved a lot. I socked away what I could every month over a period of years for an eventual car purchase. My daily drive is a 2014 Volkswagen Jetta, so I knew I’d need to replace it eventually.

I had also saved 2020’s second stimulus check of $1,400. In addition, I’d benefited from a cash gift Mom made to all her children a couple of years ago. I parked that in my online savings account.

Result? I was able to plunk down $18,719 at the dealership, with no talk about financing and what rate I’d get. Almost any rate would have been more than I was willing to pay, given today’s low savings yields.

I estimate—thanks to a handy online car-loan calculator—that I saved about $1,000 in interest, assuming a three-year loan in the 3% range.

While my emergency savings are depleted, I feel my job is secure now after the initial pandemic scare. I hope to bank the $400 or $500 a month I would otherwise have paid on the car loan.

The second reason I did well: I had good advice. Ben is a friend and colleague at work, and a real car-buying expert. To identify a car to buy, Ben recommended that I search area dealers’ inventories on Cars.com. He also told me to ask the dealer for an “out the door” price before I went there.

That’s how I found a blue 2017 Volkswagen Jetta with 46,000 miles for $16,941. It was offered by a small, independent dealer close to my apartment.

The dealer provided the “out the door” price to me in a text message. It included taxes that were accurate for the state of Maryland, and fees that were reasonable, according to Ben.

There were many VWs which drew my attention at a larger dealer in Alexandria, Virginia. But Ben advised me that dealer fees are much lower in Maryland.

My experience at the local dealer—who asked for a cashier’s check—was relatively quick and hassle-free. I took my son along, so he could learn about the car buying process.

In selecting a car, I adjusted my expectations to financial reality. A more expensive model with nicer trim would have befitted my self-image as an older man of at least some means. I had my eye on a Passat with leatherette seats and a sunroof.

But my income and my bank account couldn’t support that. I went with the Jetta, which has base trim and cloth seats. Despite my tight budget, the 2017 Jetta I bought is worlds above the 2014 model I drive. It includes modern conveniences that I’ve never had in a car, including a backup camera and heated sideview mirrors.

I took what the market gave me—another humble vehicle, but one with a reasonable price under the circumstances, and no financing costs.

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Andrew Forsythe
Andrew Forsythe
11 months ago

Congrats on your new ride—sounds like you did well in a very tough environment. Only once did I have a car with heated rearview mirrors and I miss them now—very handy feature.

Nate Allen
Nate Allen
11 months ago

I was racking my brain trying to think of the reason for heated sideview mirrors. At first I was thinking, “why would it matter if someone had to move the mirror manually that their hand would stay warm?”

Then, it dawned on me that it was for ice or frost! I guess this feature would be more valuable in some parts of the country over others. (And in some circumstances such as those without a garage)

IAD
IAD
11 months ago

You are right that Virginia’s dealer fees cost more than Maryland…$250 more. I don’t think I would eliminate a car over $250! If you really want to save some money, move from MD to VA. MD’s taxes are crazy high!

Car Dealer Fees by State 2021 (worldpopulationreview.com)

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