New Wheels

Hubby got done with work extra early yesterday so we went car shopping.  I probably got a little sun burnt from all the walking around we did.  I swear it’s a sales tactic to walk us to the front of the lot to find a car that’s actually in the back.

We originally wanted to save up money to purchase a car with cash.  When I realized my car wouldn’t pass inspection at the end of June, we ran out of time to save and hubby applied for a car loan and our goal was to keep it under $10,000.

So what do you do when your car completely fails and you need a new one NOW?

You crunch numbers.

My husband is practically a ghost to the credit industry.  The interest rate he would wind up paying was ridiculous.  Then the dealership guy suggested trying to see if we’d get a lower rate with me as a co-signer. Holy great credit score, Batman!  It brought the rate down by 15%!

I know I often tell people not to co-sign for anything but my husband and I are in this for the long haul and I fully understand any possible ramifications.

After seeing the low rate we could get and seeing that we could afford a little more car, we went back outside to check out a car we had been eyeing earlier.  It was gone.  We found the same model a year newer and the sales guy took off a couple hundred.  We were actually getting the car at $500 under the Kelley Blue Book value.  But after all the fees and extra crap they lure you in to, we ended up spending about $6000 more than our $10,000 goal.

This is the first time hubby or I had purchased a car through a dealership.  When one lady came out with a binder full of annoying sales pitches to purchase extra stuff for the car, I wanted to laugh out loud and then reach across the table and strangle her.  But, knowing the damage that rust can do to a car, we opted for some service package deal to put some kind of coating underneath the vehicle that prevents corrosion.  The package included some paint coating thing too and maybe something else.  I have such a horrible memory.


A 2011 Toyota Corolla with just over 24,000 miles.

Below:  The old car to the left and the new car to the right of it.

If memory serves me correctly (it usually doesn’t), we signed on for 60 months.  I remember seeing a page that said we’d wind up paying about $900 in interest if we paid the minimum.  Since we can afford to pay more, we likely will.

We had to get comprehensive insurance coverage on the new car.  We just had the state minimum coverage on the old car so our $26 a month payment jumped to $85.  However, we’ll probably save about that much in gas each month as the new car gets so much better gas mileage than my clunker!

I think I remember someone saying that we won’t have to pay for the state inspection at the dealership when the car requires it again sometime next year.  We decided to register the car fully in hubby’s name to avoid paying state property taxes on it.  Originally we had planned on transferring registration from the old car but if both of our names were on the registration we would still have to pay property taxes.  Hopefully the DMV will refund my renewal.  Ugh, I’m kicking myself for jumping the gun on purchasing that online!


19 thoughts on “New Wheels

  1. I’m jealous of that $26/mo insurance… mine is a state minimum and it’s still $40/mo. I am not familiar with that whole state part tax, but couldn’t you guys get a loan through, say, your local credit union or a separate bank? I’ve heard they are usually best able to offer you better deals than at dealerships. The car looks like a tremendous upgrade, so, many congrats.

    • Thanks. I wasn’t familiar with the property tax either when I moved out here. I think it’s an East coast thing? You have to pay based on what your car is worth, I imagine it would have been pretty expensive with the new car. Hubby was originally pre-approved for a $10,000 car loan through the credit union we bank with. But we were going to spend more than that and needed the car as soon as possible. We were confident with the rate we ended up getting, it’s really really low. We can always try to refinance with our credit union after a while but I’m not sure any place would be willing to go much lower.

  2. Congrats on the new car! When I got my mine it was a similar length and I think I’ll only be paying about $500 in interest over that time frame. My parents did co-sign for me though, so that awesome rate was not just because I have a good credit score or anything. Glad you found something that could work within your budget!

    • Thanks Kyle! We’re probably going to pay it off much quicker than 60 months so the interest will be a lot less. I’m so glad auto loans don’t work like student loans do! Just a couple hundred in interest would be WONDERFUL on my student loans!

  3. I am glad you have good transport now–a lot less worries where this is concerned. But I am shaking my head over both you and writer Kyle not knowing how much interest you will be paying. Frankly this is frightening. Sit down with a calculator and do the arithmetic right now.

    • It’s not that I don’t know, it’s that I don’t remember. The info is on a sheet of paper in the car with my husband, on base. We’ll likely pay off the car loan sooner than 60 months so the interest we’ll wind up paying will be a lot less than estimated.

  4. Some examples for you to work from.

    if you have a 3% interest rate on a $16,000 loan over 5 years, assuming you are paying $287 a month then you will pay $1,250 interest overall.
    If you have a 5% rate then your monthly payment will be $302 and you will pay $2,116 interest overall.
    There are plenty of internet sites to do the math for you.

  5. Hey Kasey!
    Congrats on the new car! That’s very exciting – that should be one less thing that you guys need to worry about. It was a good idea to co-sign, you guys are a team now and it reduced your interest rate. It’s great that the monthly payment is so affordable and that you’ll be able to put more down on it if you guys want too.
    $900 in interest sounds pretty reasonable so nicely done. Sounds like a sweet little deal!

    • Thanks Lindsey! Hubby just made an advancement so a pay increase in imminent, more money towards debts! We’ll likely be able to pay this car off in 40 months rather than 60 and we’ll save more on interest.

  6. Congrats on your new car!! I *heart* Toyotas! I had a Corolla at one time – until it was totaled by a lady on her cell phone. Then I bought a BRAND NEW Sienna – my one & only NEW car that I picked out myself. Totaled by a 16 year old more interested in changing her radio station than watching the road. Sigh … well with the $$ I got from that car I went out & bought the exact same car, exact same year – but 20,000 more miles. But many years later it’s still running at 130,000 miles. And when this one goes, I’ll get another! Did I mention I LOVE Toyotas?

    • Thanks! I’m hoping this new car will last us many years. My old one was a ’95 and had almost 197,000 miles on it. I have to wonder how much longer it could have lasted if it had been properly treated for rust before I even bought it in 2007.

    • My husband was really partial to getting a Honda Civic originally but the few we had to choose from were either brand new/too expensive or had sun roofs and that was a big turn off for both of us. That’s a spectacular down payment you made, congrats!

  7. I had a similar issue when I bought my current car. My old car had died on me! I was carless for a few months until I had enough cash saved up to buy a rebuilt title. After 2 years this has been of the best purchases of my life,

    • Nice! If we had started our budget earlier we may have ended up purchasing an older used vehicle but I’m happy with our car…hoping it will last many many many years and lots of miles. 🙂

  8. Pingback: 2013 Year In Review | Debt Perception

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