Buy a Car Like a Boss!

Buy a Car Like a Boss! - Pathfinder Front

The Green Swan eBook

Hello again!  Thanks for checking out The Green Swan. Before I get to today’s post, Buy a Car Like a Boss, I have a big announcement to share.  The Green Swan ebook is published and ready to go!  The Green Swan eBook is over 30,000 words, 82 pages on normal 8.5 x 11 paper, and over a year in the making to help you get on the path toward financial independence!  To find out more, visit The Green Swan eBook page.

Buy a Car Like a Boss!

Now, back to today’s post.  The Green Swan is a way of life.  It’s about working harder and working smarter to make money…and more and more money every year.  It is also about living within your means; frugal living in a sense, but still enjoying a comfortable lifestyle.  You need to enjoy certain creature comforts and make life worth living.  And The Green Swan is also about getting things you want, but paying less for them.  To that point, today I’m going to outline the decision making process my wife and I went through recently when buying a car, and how we ended up getting a steal of a deal.

This was our first car purchase we have made together.  I had always told myself I’d never buy a brand new car.  It is foolish and I would be just throwing money down the drain.  The first few years of a car’s life are the most expense considering how fast they depreciate.  So why not buy a car that is 3-5 years old with 30-40K miles and save $10K off sticker price, right?

That is what I always thought until we began researching cars more diligently.  And gradually, very gradually, we began to change our mind and…spoiler alert…we ended up buying a brand new car!  What a waste you may say.  Why would you splurge like that!  You fell into a consumerism trap!  That’s not living frugal!!!!

Well, I actually think we won out on this deal.  No, we had never splurged on cars before, we hardly ever spent money on our cars.  My wife was still driving her college car, a 2002 salvaged title Pontiac Grand Am.  And I was still driving a car I got shortly after college, a 2007 Nissan Altima which I bought used.  The Pontiac was definitely reaching the end of its life and we knew it was time to trade it in soon (or send it to the junk yard, actually!).  We started our family, had a one kid with plans for more and we needed something safer, more reliable, and also more room.  It was time to head to the dealership!

Buy a Car Like a Boss! - Nissan Dealership

We focused our search on an SUV, and more specifically, an SUV with a third row seat.  We wanted at least seven seats to fit our growing family and guests.  When we have grandparents, other family or friends over, we would want to fit everyone in one car if we go out to eat or journey around town.

That’s not asking too much is it?  We wanted something we would be happy with for years and fit our evolving needs over the long term.  We definitely wanted to avoid having to up-size our vehicle again and don’t care to car shop again for years.  This is a definite characterization of a Green Swan decision process.  Practical, nothing hasty, plan for the long term, measure twice and cut once.

As we were researching SUVs that met our needs, watching numerous YouTube video reviews, reading online reviews, checking out message boards for candid user reviews, etc etc.  And ultimately what we kept coming back to over and over was the Nissan Pathfinder.  Very practical, reasonable, good value for the money, and of course good safety ratings.

So boom, mind is made up.  We are getting a Pathfinder.  Now what model year?  In 2013 the Pathfinder underwent a major remodel.  Lots of changes, but overall more family friendly and a stylish new look.  So we wanted at least a 2013 or newer.  We didn’t need to buy a car right away, but we wanted to get it in the next six months or so.  Wanting a 2013 model year or newer did limit us a bit in terms of the availability of used cars on the market, but there were still plenty available.

Why did we end up choosing a brand new car over used?  Well, it was October 2015 and on the radio we heard an ad for great deals on all new Nissans at the local dealership (no, I did not get suckered by marketing which I vowed against).  While it is no secret that you can get some of the best deals when buying new cars (e.g. thousands off MSRP and/or 0% financing), I needed to know more.

I looked up the dealership online and it looked like a great deal was just starting, $8K off MSRP on the Pathfinder.  That actually put the price down right in the range of a lot of the used Pathfinders in the upper $20Ks.  On top of that, I remembered that TrueCar, through its relationship with my employer, offered a deal on new cars and I could get another $1K off sticker price (only offered on new cars).  This made the price very hard to beat.

But how would we pay for it?  We knew this purchase was coming for a while so we saved up in order to pay cash.  However, if a low rate loan was available we would definitely consider it.  So I googled car loans in my area and found a very good advertised rate of 2% on auto loans from a local community bank.  I didn’t bother calling to get a loan pre-approved, just knowing it was available was good enough for now.  With all this info in my back pocket, I went to the dealership.

Now it was time to negotiate!  Very stressful process, I must say, especially for someone who has never been through the car buying process before.  Granted, I have taken numerous negotiating classes and read many books, so I felt prepared.  But bottom line, I didn’t get them to knock the price down much more.  But what should I have expected, it was already a great offer price.  And according to TrueCar, I was getting a price in the top 15% percentile of all purchasers, or an “exceptional price”.  Not a bad deal at all.  But I did get them to throw in free servicing for the first year!

Buy a Car Like a Boss! - Pathfinder Rear Photo

I was sold!  I went against my previously held beliefs of only buying used cars.  But I think it turned out to be the best deal.  We got a brand new Pathfinder for the price of a 2-3 year old used Pathfinder.  I ended up qualifying through Nissan Finance for a loan, 0% down, 63 months, and an interest rate of 1.85%.  How could you beat that?!  Even though I was ready to pay cash, I figured I could easily invest the money instead and beat the 1.85% rate in the stock market.

The lesson I learned?  You can’t go wrong getting a gently used car.  It’s a great value and the car should last a long time.  But if you plan out your purchase in advance, know what you want, and keep a look out for good promotions, you may end up with the best of both worlds… a brand new car for the price of a gently used car.  And with a low interest rate to boot, that’s how you buy a car like a boss!

What do you think?  Is it completely unreasonable to buy a brand new car?  What else have you considered before buying a car?  Let me know in the comments below.

Thanks for taking a look!

The Green Swan

Work Harder, Work Smarter, Retire Earlier and Find Your Beach

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Apathy Ends

Our last car purchase was brand new about 2 years ago, not sure I would make the same decision now (and thankfully I won’t have to for awhile) but I will still look at new cars – when dealerships get desperate, you can walk into pretty sweet deals (we got .9% financing through Honda)

JW

Yeah it seems like you generally get the best deals on new cars. Cash back, low interest rate, and zero miles so you know you’ll have it for a long time.

JW

I consider myself fairly debt adverse, but that’s the same conclusion I had as well. I had the cash to pay for it but I could put it to use for a better return so it worked out well.

Vicki@Make Smarter Decisions

I think one of the most important things you did was some planning ahead. A vehicle can die at any point and it takes a lot of time to do the research you did to make a smart decision. We currently have 3 cars (looks like a used parking lot at times in our driveway!) – but with teenagers that happens! One is a 2004 Impala we bought new, another is a 2008 Dodge Caravan bought new and a 2005 Subaru Outback bought last year. We have been lucky with all of them – but I think now that we are FI and not commuting to “jobs” each day, used is the only way we would go. You make some good arguments though for your situation!

Mr. SSC

Good job on that deal! We did a similar thing when we went that route, but got a Mazda CX9 instead, MRs. SSC thought the pathfinders were too big then (2012). Same type of thing though, getting new for close to the same price as used and zero % financing, so we took the $$ we had set aside for it and just invested it. It was just last month Mrs. SSC paid off the last $3500 or so left on the loan.
More recently I traded in my car for an actual commuter car and found a great deal from VW (almost $6k in incentives) where the new Jetta was almost the same price as a 15-25k mile 1-2 yr old Jetta. You can probably guess what route I went down. Especially commuting 60 miles roundtrip each day, it was like getting a free year of miles for me to put on it at almost the same price, lol.

JW

Yeah great deal on your cars too! Great minds think alike!:) Definitely a great way to go and it’s always nice knowing you’re the only owner of the car and not have you worry about what the previous owner put it through. Thanks for sharing.

Amanda @centsiblyrich

Sounds like you did a great job researching and planning your vehicle purchase! We used to have a bad car buying habit, have been through several car transactions and have purchased both new and used. We’ve gotten good deals on both, but overall have gotten the best deals on the newer used cars, those that are around 2 years old with lower mileage. That said, we bought our last family car brand new, for $1500 after trade in – not bad! Thanks for sharing your experience!

JW

That’s great. Sounds like you’ve had some good buying experiences. Always a number of considerations to weigh each time you buy. Thanks for sharing.

Ty @ Get Rich Quickish

Sounds like you did the research, figured out what a great deal looked like and make the decision that was right for you – perfect!

I also bought a new 2016 about 2 weeks ago for many of the same reasons you just mentioned.

Enjoy your new ride!

Mr. PIE

Our recent experiences in buying cars has been much more favorable compared to 10 years ago. Being able to search the car, the price you want to pay and essentially do much of the negotiation on line beats the horrendous sale tactics of old.

We also got a remarkable deal when we traded in Mrs PIE old Subaru. We swear the bottom was about to fall out of the thing – making a horrendous rattling sound. It must have disappeared when they did a test drive as we got nearly $1500 more for the car than we ever imagined. A rare win in car dealing for sure and not one we expect to get next time!!

JW

Wow that’s awesome regarding the Subaru! And yes the resources online make it so much easier to prepare yourself for the car buying experience and to help ensure you aren’t getting a bad deal.

Visionary Money

Just yesterday I was driving a couple of my employees to an off-site location at work and they noticed my car was at 213,000 miles (something I’m rather proud about) and said, “why are you driving this piece of s… I thought you were rich.” To which I replied, “how do you think I became rich?” I’ve never had a car payment in my life. I’ve had one repair for $650 in 12 years.

I watched my parents buy pieces of junk to save money and spent thousands in repairs and we broke down all over the place. It is worth a little extra money to have something dependable, that will last and gets great gas mileage. We spend too much time and money on stuff that gets us from A to B.

JW

I hope to drive my pathfinder that long as well, that’d be great! That’s exactly what we did with our previous cars and that can be worth it as long as it’s still dependable. My old boss drove a super old Corolla and he was making some good coin, I remember thinking if it’s good enough for him it’s good enough for me too.

Thanks for sharing your story!

Arrgo

I bought my first new car about 2 years ago at age 44. Previously Id always found deals on cheap used cars and drove up the miles and in a few cases replaced the motors and gotten another 100k+ miles out of them. My last car was a 1996 that I drove for over 13 years. I had the money so I thought I would take a look at something new and possible treat myself to less hassle of repairs for a few years. I ended up going with a silver Mitsubishi Outlander sport which was less than many others in its category, had a good warranty and looks sporty. Im pretty good at putting in the effort to find a good deal. I bought the car report for $12 from Consumer reports which is driven by TruCar. This really lowered the price point from what I saw at a few dealers I went to. I think the trick is to visit some dealers first to decide the exact model and options you want before using TruCar. Once I had my price report, I visited 3 dealers (some were TruCar dealers and some were not). There was quite a difference in what the different dealers would do on the price. I even played my more local dealer against one that was farther away (but cheaper). They even had a meeting separately with their general manager on it and said they would call me. They said they couldnt figure out how the other dealer could do that price and would only go so low. Since I already took a few test rides locally and knew exactly what I wanted, I ended up negotiating over the phone/email with the other dealer which saved me about $1,300 over the local places best price. That dealer is about an hour and 45 min ride from me but to save that much I figured I would go for it. I put down a deposit on my credit card and they ordered the car (from another nearby dealer by them) with the few options I wanted. I drove up there once to inspect it and do the paperwork and they delivered it for free the next day. I’d prefer to buy closer to home in case I needed anything but so far it hasnt been an issue and I just go to the other dealer for maintenance sometimes. I changed a few options after I created the TruCar report but I subtracted those out and still negotiated it down a few hundred $ from there. I bought it in December towards the end of the month so they had a $1500 mfg rebate and were probably willing to make a good deal to boost their sales numbers. Another hack I did was to not pay the tax at the dealer. I paid it at the DMV along with the registration etc. using my credit card which I figure generated me about $30 in cash back. Next time if I buy new Im going to see how much I can charge using my CC at the dealer. My AMEX card has a car buying option which looks to be driven by Trucar and will let you know which dealers will allow you to use your AMEX card there. (Not sure now much they will let you charge, but why not get rewards points if you are going to spend the money anyway?) A few final points: You dont have to accept only what the dealer has on the lot. From my experience, you can order almost any model/ color you want and they will find it nationwide and get it for you in a few days. I told them I was a serious buyer and they were jumping to find the car for me. Some of the options are dealer add-ons anyway, so they will order those parts and put them on for you. To me, the price difference between new and used wasnt that much in most cases for what you are getting. Sure I could have saved a few thousand $, but also I would get a used car with some wear and some second rate 1 year warranty and perhaps unknown problems, shorter time till I have to replace the tires, brakes etc. Lastly, dont be afraid to be a good negotiator. I had the money and my research plus TruCar. A few times they had the sales guy I was talking to plus the Manager come over at the same time. I think its a sort of intimidation tactic they use. Remember these guys are professionals and sharks! Dont let it bother you. You can always leave and think about it some more. Remember, you are the one thats in control. Its your money. Hope this is helpful.

JW

That was very helpful, thank so much for sharing the great tips and advice! I don’t think there is anything more enjoyable as a blogger than to get fantastic comments like yours, thanks for taking the time to do so!

Price shopping and negotiating with multiple dealerships (and getting them to negotiate against each other) can be a very valuable trick. And you have to love hearing them sigh and complain as you turn the screws tighter on them and then go back to the other dealership to see if it can beat it (all over the phone ideally). That’s a value I’ve realized now that I live in a bigger city with multiple Nissan dealerships.

That is a great option with your AMEX card, I didn’t realize that. I remember when I was looking at buying a used car years ago (didn’t end up buying it though) the dealership would allow me to put up to $2K on a card. If you’ll be paying cash already, might as well put it on the card, pay it off in full next month and get the rewards.

Arrgo

Thanks. I’m just glad to contribute a little something back when I can. And thank you for all the time and effort you put into your blog for everyone. Its very motivating. There really is a better way than working for corporate america your entire life.

Jon

I agree with your approach. Shop around for a great deal on a new car and you get the best of both worlds. A car that has never been in a wreck or in a flood along with a rock solid warranty. You also get a good solid deal if you can be patient. This is the approach that we have always taken and been very happy. Once you’ve got the car, ride it out as long as possible – enjoy!

Ray Ray

Wow! Well done J.W!

I think the key is to plan ahead and do your research before buying a car.

It sounds like you got a great deal. I bet Mrs Swan was happy too 😉

JW

Thanks! Yes, we did lots of research that’s for sure. And she was definitely happy to get rid of her old salvage title vehicle :).

PatientWealthBuilder

I still drive my 2007 Altima!!! Its very funny that we had the same car or is it just a sign that Nissan makes great cars? I see Altimas all the time actually. I think they are a very good car and would buy another one but I don’t need to. It has over 200K miles on it. I get the same kind of comments from my co-workers that your other commenter gets. Many of the people who work on my team drive nicer cars than me. I’m ok with that though because I’m comfortable with my lifestyle and excited about building wealth slowly over time. I’m hoping that my kids will thank me one day.

JW

Altima is a great car! Mine still has under 100k miles and is in great shape so it hopefully has a long life ahead of it. Thanks for sharing… And I’m sure your kids will thank you one day :)!

Rudy SMT

I brought a brand new car last year. I got the usual 3 years service, loan at 2.5% and first-year insurance.

It’s my first brand new car after have own three used vehicles. The reason I bought it is because my wife only wanted a new car, no way to reason or change her mind.

Personally, this has been my worst deal ever, buying a brand new car is just awful from a financial point of view.

The reasons are:

~ The car the first year lose the most of the value in any years (approximately 20%). From the second year the lost drop to around 10% and decrease over the years. So, if you buy a six-month-old car with 5,000 Km, expect a significant discount.

All my previous cars were 1-2 years old. They felt brand new but purchased at a great discount price.

~ All the free services and insurance staff is FREE. Not true, you pay for it because its priced in the purchase price.

However, two are good reason to buy a new car:

~ Get finance so I use others money while I invest mine.As far as I make more than 2.5% per year, I’m gaining.

~ All the paper work is sort out from the car dealership.

In conclusion, my opinion is to buy cars 1-2 years in mint condition for a 20% discount. I’ll drive this new car till I lose the wheels, literally.

JW

I certainly agree with you Rudy, and that’s why I went into the car buying experience with the intent to buy a 2 year old vehicle. It would be “like new” but with a great discount as you mention. But with the deal I ultimately got on my new car, it was basically the same price as the used one. It worked out to be the best of both worlds.

Joe

So you paid around $28k? I like new cars too. We got a new Mazda 5 in 2010 for about $18k. It has 3 rows and 6 seats. That works for us. Buying at the year end or model change is a great way to save.
I haven’t looked at a new car lately, but the price seems much higher now. Not sure if we will buy new next time. Hopefully, the car will be trouble free for another 6 years.
Nice looking car, btw.

JW

Thanks Joe!

Yeah we paid right around $28k. And that includes a couple bells and whistles added including the luggage rack and hitch. You’re right, timing can play a huge part so it’s always good to plan ahead and not have to buy in urgent situation.

I hope to not have to buy again for a while but we’ll eventually need to replace the Altima.

Future Proof, MD

Hi JW, found your site from Physician on Fire. Great post. I bought my first new car in 2009. I utilized Truecar, Costco and Sam’s Club’s auto purchase programs for price comparison. Once I decided on the car model and trim level (Honda Fit Sport 2009), I contacted all of the Honda dealerships and asked for the lowest price they can offer. I let them know I will be buying a car within the next 48hrs and all it mattered to me was the lowest price. I went through 2 rounds of bidding and was able to get a price that was within the “Exceptional Price” range on Truecar’s price graph.

The one thing I wish I had done differently though was to finance the purchase. I believed in paying for everything in cash back then. In retrospect, I should have financed the car at a very low interest rate and then invested the difference.

JW

Thanks for stopping over and checking out my blog! Can’t think of how you could have gone about buying your car any beret and sounds like you got a great price.

The Russian Guy

I will never ever, ever-ever buy a new vehicle. I’ve done mistake two times (a car and a motorcycle) and will not do the same. Losing 30% of a car value doesn’t meet my strategy of becoming a millionaire.

We bought our car 2.5 years ago for $30K (nothing down, 2% APR), we paid it off year after, today I checked KBB and my car worth only $19K – that was really stupid from my side. Lesson learned

JW

Thanks for the comment and I appreciate the perspective. Buying a car is definitely not a great investment decision since, like you said, it’s s depreciating asset. But there are other considerations to make besides financial.

As far as how expensive a car you buy, that largely depends on what stage in life and asset accumulation you are.

Thanks again for the comment.

Stefan @Mllnnlbudget

One of the few pf bloggers I see that bought a new car. You have definitely put a lot of time into the research and in my opinion got a steal of a deal. I know many people say used cars are a waste of money as they depreciate blah blah blah.

But, I know many people who bought used cars that were only 3-4 years used and had to dump a lot of money into fixing them. If you can find a deal like you did I would go new over used. Also, from a safety perspective new cars are technically safer which is higher on my list than price.

Josh

I like to buy used and bought my dream car (Mustang GT) in 2012. The previous owner had it for 6 months before trading it in. So I got it for $8k under sticker price. I think the dealer was just looking to flip it because I could have bought it & sold it the next day and would have broken (or come really close) even after including the title fees & taxes.

Plus I still was able to get new car financing as well because it was still new enough.

So I agree that buying new isn’t always a cardinal sin.

Alyssa Fischer

I honestly think you bought new for all of the right reasons. If there is ever a blog post that could change my mind, it’s this one. Next time I’m in the market for a vehicle I’m going to have to bring you with me haha.

JW

Haha sure thing! Like I said, I wasn’t initially in the market for a new vehicle, I just stumbled into and it worked out. Glad you enjoyed the post 🙂

Julie @ Millennial Boss

I actually just sold my 2015 Subaru Forester that I purchased new in late 2014. I got a similar interest rate but I couldn’t justify being a two-SUV couple now that we moved to California. We moved within walking distance to work for me, will rarely see snow, and don’t have kids yet. I also calculated that my $387 monthly payment ballooned to $750 when you calculated maintenance, insurance, gas, etc. I cut my losses and sold it with significant depreciation.

JW

Ah, that is a bummer you had to sell it with significant depreciation, but at least you’ll have some good savings going forward. Being a one car house is the way to go if doable!

When my wife and I lived in California we were fortunate to live walking distance to both our jobs, so we had no cars for a while. And when we wanted to go on a weekend road trip we would just rent a car. It was great, very convenient and much cheaper than having cars out there with us. Just like you, it is hard to justify that cost.

Thanks for sharing!

Finance Solver

I recently went through a car buying process, it was tough! I’ve never known about TrueCar, however, and will be using it the next time that I purchase! I bought a 2015 Nissan Versa Note Hatchback with the lowest price for the mileage in the city. The researching process was fun especially because it was my first time!

I would like to know your points of negotiation leverage that you used to get the free servicing / price discount 🙂 I’ve been getting interested in negotiations a lot lately!

JW

Besides the special deal price, I didn’t really have any luck negotiating then down further. But I tried hard to the point of exhausting everyone. I think I got them to give into the free service at the end to close the deadly and get me to stop.

It was my first time so I didn’t want to walk away without getting something. In the end and looking back at it now, I was already at the very low range of the Truecar estimate so there really was not room to negotiate much further.

MS

Back in January of 2011 – I woke up and saw an advertisement for a brand new 2010 Saab 93 for $12K off the sticker price – well the rest is history – I still have the car today…(even though Saab went out of business it’s a solid ride). Thanks for the great post.

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