Buying a Car for the First Time, The Finance Edition

A lot sure can change in a year, huh? Last February I wrote a whole diatribe about why I didn’t own a car; I immediately followed up on that article with another urging more folks to go car-free if they could. Fast forward 14 months and here I am a newly-minted car owner after buying one for the first time.

So yeah, that’s a big 180.

I still stand behind what I wrote in those pieces, even if they come off as kinda snooty to me now. Enough has changed in the year-plus since then that’s made me change my stance on car ownership. My savings and investments netted me another six figures, I’ve grown more comfortable with spending my money, and a little thing called a global pandemic turned everything topsy-turvy anyway. After running the numbers and calculating how much I’m willing to spend on my own happiness (along with some progress over my financial anxiety) I’ve decided getting a car is THE WAY TO GO. Get me out of this city more often! I want to see friends and do fun solo adventures! I even got a hybrid to feel better about the environmental impacts! Let’s go!!

Now that you know the “why” of my buying a car, let’s look at the “what” and the “how”.

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How Did I Choose This Car?

The car I ended up with is a pre-owned 2011 Nissan Rogue with 106,000 miles and a new braking system. I had been on the lookout for a minivan or SUV with great mileage, great storage options, and that needs minimal maintenance. After looking at a few different cars I settled on this one at a used car dealership, which I’m pretty happy about so far. They’ve been awesome at finding me a car in my budget once I made it clear I had a clear budget I’d be sticking to:

Darcy: My budget is $8,000. No more.
Salesguy: You should look at some of the $10,000 cars we got! Your car payment would be peanuts!
Darcy, after staring unblinkingly: I’m not comfortable with a car payment so that’s a no.
Salesguy: Oh, okay… $8,000, then.

We looked at a few different cars they had on the lot before I landed on the Rogue. After a week in their shop switching to the new brakes that baby was mine!

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It’s really important to know what kind of needs you want your car to fill before you purchase one. If I wasn’t planning on doing a lot of road trips and hauling big, heavy items with my car I could’ve gone for something much more compact and cheaper. Alternatively, if I just wanted a set of wheels I would’ve risked paying for more car than I strictly needed; it’s way too easy to get sucked into car envy and getting something I paid way too much for. Luckily I did my homework, paid for pre-purchase inspections, and got the type of car I wanted to get.

The Finances of My New (to me) Car

Going into this, there was surprisingly very little I needed (besides the cash) to purchase a car.

• A license
• Extra cash for additional fees
• … Patience? I guess? You need a lot of it when looking at used cars, especially from private sellers.

It took me some weeks to look at several models, talk with auto insurance companies, get all the paperwork sorted, and (finally!) drive off the lot. I knew my price range from the beginning after looking at what I was willing to spend and comparing it to the used car market around me. Craigslist and Kelley Blue Book were both great resources for informing me of which cars were going for what. Not only did my $8k budget cover the ranges I was seeing, it also fit excellently within my means. No way would this have been a good purchase if I was still making $15 an hour; even working full time meant that car would’ve cost me 30% of my take-home pay. At my current salary it costs me more like 10%, which is much better.

$7,995: The actual car price

Exactly what it says on the tin. I chose not to negotiate this as it was already an excellent price according to Kelley Blue Book. The car is in great shape, it drives like a dream, and, again, got that braking system put in at my request. All of the above sounded good to me.

$1,148: Dealership fees

Y i k e s. This was not so great, hence the need for additional cash. These are all legitimate fees too, broken down as follows:

• MA sales tax: $530.63, 6.25% of the car value + doc fee
• Doc fee: $495
• Title fee: $75
• Registration fee: $45

That four-figure amount gave me pause, but ultimately I’m fine with paying it. This is one of those (few) times I’d rather pay someone else to deal with a task and save myself a headache. In this situation I would’ve stressed myself out coordinating with the RMV on everything I needed to do. Instead I chose to go the dealership route so they could be the ones to take care of all this.

$918: Auto insurance for the next year

Divided up per month this comes out to $76.50. I paid in full for this because Liberty Mutual offered a discount for doing so. I almost didn’t go with Liberty Mutual because I had a better quote elsewhere; when the rep I was working with found out about the other price he got this down to this price. I also needed renter’s insurance so the price lowered further, PLUS I’ve got a chance to get a further discount with their RightTrack program. A lot went into my favor to garner this rate, including my spotless (so far) driving record, home location, and the fact that I don’t need this car for a commute. I’m hoping I’ll get a lower rate when it comes time to renew next year, so wish me luck on maintaining my no-accidents streak.

$123: Dashcam

You better believe I got one of these bad boys! I have seen enough videos of idiots in cars to want this extra assurance. Even if I wasn’t on the Internet, I’ve seen how people drive in Massachusetts. They’re not called Massholes for nothing. (And I’m also convinced driving schools around here are a joke… when I went to take my driving test they had me do very little to pass me. I think the instructors were in a hurry to get it over with.)

Anyway. This price doesn’t cover the cost of a memory card because I already had one on hand. This was my only “accessory” purchase I bought at the same time as my car.

TOTAL ACTUAL COST: $10,184

It has now been a few weeks since I bought the thing, which has given me plenty of time to feel any financial regrets over the purchase. It does come a little as a surprise that I don’t have any regrets over the purchase. I’ve discovered I really missed driving, even if I do have to deal with Massachusetts roads and drivers. More surprisingly, this hasn’t made a dent in my finances thanks to the stock market being on a tear and some extra money I had come my way.

If you include the $2,000 in stimulusus (stimuli?) I got this year, the car is back to costing $8k all in. Add to that the $1,400 or so I got in my federal tax return and that’s now a little less than $6,800. But none of that matters that much since I happened to get a five-figure bonus at work last month. (Been keeping that under my hat for a while!) The amount of the bonus more than covers the total actual cost of my car purchase, which was amazing to notice. I’m not going to claim the car came completely free, just that I managed to get it without taking money from my salary.

Now What?

There’s still some ongoing costs of this vehicle I have to take care of, like gassing it up and the yearly taxes/state fees for it. I’ll also need to start performing regular maintenance (or pay someone else to do it for me) and pay for any repairs it might need down the road.

A year ago this would have clearly squicked me out, but my finances and mindset have changed quite a bit since then. I’d much rather have this easy mode of transport for road trips and hiking outings. This is also a game changer for checking out real estate outside of Boston, which I’ve wanted to do anyways to see if I can lower my $20k/year rent. And with the additional ease of convenience and ability to haul more stuff for flipping, the price tag is definitely worth it to me.

It couldn’t have come at a better time either, as my old bike has bit the dust (RIP Ol’ Blue). That sure was one big upgrade for someone who used to be anti-car, huh?

Cover image credit: Gio Bartlett via Unsplash