Our Newish Car

We picked up our new used car yesterday.  It is so exciting to be driving a newer car! Of course, it's not a brand-new car.  It was never even a consideration to buy a 2020.   The only plan was to buy used and pay cash.  My search criteria was for a dependable brand (Mercedes, VW, BMW, etc.), in the $10,000 - $12,000 range.  While the plan was to buy from mid-March on, the search began a while ago since I wanted to get an idea of what was on the used market and how much it would cost.  This was time well spent.

Our Benz was found on the side of the road, being sold by the owner.  We bought it because she is a friend of a friend, and she greatly reduced her selling price for us.  I found this Jetta TDI Sportwagen  through a search on a used car site.  We printed the offered price and went to the dealer to look at it.  It was the first car we looked at.  There was no need to look for anything else or to comparison shop because it was exactly what we needed and the right price.

In addition to my original criteria, the car is a wagon and has a diesel engine.  The mileage is much lower than other cars we saw for sale.  While it is a 2013, it has only 38K on it.  It was priced higher than other cars of the same age, but it has the advantage of the diesel and the miles were about 20K less than others I'd seen sold elsewhere (as in outside of our geographical area).  We hit the high point mark of our price range, but think it was worth it.  It also helps that it is a certified pre-owned vehicle with an unlimited mileage 12 year warranty.  Our estimate is that we will be able to put 300K miles or more on it over the next ten years (or more).

While we had the option to put in an offer on-line, a test drive was an absolute must.  TBG is too big for most cars and we were happy to find his fist fit between the top of his head and the roof (which is a sun roof, which helps).  The interior also has many more features than we had expected to find in a car of our economic means.  The dealer offered rust-proofing for $699, which we declined.  First, I suspect the first owner did that.  Secondly, I can find it from an independent source for far less.  The transaction went really fast since we paid in cash.  We were allowed to charge 3K of it, which we did simply for the reward points.  It's all paid for this month as far as we are concerned.

The down payment was made prior to our state's COVID-19 shutdown.  The impact of having so many things closed, is that TBG will have a much lower income this year.  There was no thought to not buy the car because we'd spent around 6K on repairing our two old vehicles last year.  This purchase just made sense.  Interest rates are super low, which would probably encourage many to buy new.  Especially those who don't have cash on hand. We have no interest in buying a 30K car and having a loan, regardless of how cheap the financing might be.  My estimation is that it will cost us under 3K per year to insure and drive.  Insurance is cheaper on an older car and the diesel engine gets almost 40mpg on the highway.  We change the oil every 10K, so that will be once per year given our average miles.

To get an idea of what we saved buying used with cash, is that a new loan would work out to be about $700 per month, with about $3000 to $4000 in interest over the life of the loan.  We'd add probably another $750 over the cost of insurance for our older model (each year).  The gas and maintenance would probably be the same.  Then, there'd be add-ons that the dealer would try to sell us.  The car would depreciate the minute we drove it off the lot, losing about 25% of its value.  Going new would tie us to around 10K per year to own and drive.  That's a few thousand less that what we paid for the car outright -- which is why buying on older dependable car for cash makes so much sense.  We'll be spending ten thousand dollars less each year for the next five years by going with a used car.  Sure, we had to come up with just short of $13,000, but we saved so much more by having cash up front (like, in almost four years of the expense of driving new).

We have champagne tastes on a beer budget.  From a car perspective the only sensible solution is to buy used.  If you do your research, you will find what you need.  Does anyone out there buy new? How many of you pay cash in full?  At this point, I don't think we'd do it any other way.