|by Mr Credit Card|
I have not been blogging this week because of a couple of things. Firstly, Mrs Credit Card was involved in a car accident last friday. Our daughter and our neighbor’s daughter was in the back seat. Luckily, nobody was hurt. However, my good old Toyota Corolla (1998 model) was hit on both sides! Since I paid about $4,500 for it a few years ago, I’d figure that there was no point getting this repaired since the best I could probably get out of it is around $1,000 to $1,500 if I’m lucky.
Hence, last week was spent looking for a car. Mrs Credit Card has a second hand Honda Odyssey Minivan. Hence, I wanted to get a car or SUV type that will act as a back up. Years ago, I had a Lexus RX (can’t even remember) and I wanted to get another Lexus because I simply liked the car. But Mrs Credit Card liked the Volvo ad and asked me to check it out. Unfortunately, I did not like the feel of the european type steering and decided to stick with the Lexus.
Here was my criteria for the new vehicle that I wanted to get.
1. I wanted a navigation system – I am simple sick of driving and looking at my Yahoo Map or Mapquest in my hands all the time.
2. I wanted a blue tooth – There are several reasons why I wanted this. Firstly, I think it is dangerous to drive and talk on your cell phone at the same time. Secondly, I am always driving to see clients and I feel I could be “more productive” if I could make a few calls in my car.
3. I wanted a quiet car and a good music system – I like to listen to classical music where there is great dynamic range. Sometimes the music is soft and then becomes loud suddenly. I find that when I drive on the highway, I cannot listen to the softer passages. Hence, in my opinion, a lexus is a great fit because it is one of the quietest cars around.
4. I wanted a dealer near my house so that servicing is easy
Now the next decision :
Second Hand or New? – Financially, getting a second hand car makes sense since a steep depreciation takes place when you leave the dealers showroom. So I went to the the two closest dealers near my house, and unfortunately, they did not have a certified used model that met my criteria.
To or lease? – I am not going to go over the differences between and lease here. But in the end, I decided to because I did not want to be stuck with paying a penalty should I need to sell the car in a couple of years.
I went to the Lexus dealer last Saturday. I found out that lexus made it actually quite simple in terms of choices. There is the basic model, an intermediate one with most of the bells and whistles and the higher end one (which has some features that I did not need). I chose the intermediate one as they had the navigation system with blue tooth.
I did not on that day as I figured it was better to think over it. I went home as did some research on www.edmunds.com and a couple of other sites. It turns out that the factory price of the model I wanted was about $41,500 thereabouts and the MSRP was close to $46,000. The average er paid close to the MSRP! Yikes, guess Lexus dealers don’t discount much. Or could it be that demand is so hot that they can afford not to discount?
On Monday, I sent an email to the sales representative that I spoke to. Upon a recommendation from my friend, I wrote in the email if they would be willing to sell the model at close to invoice price. (I found out that even if they sold it at invoice price, the dealer will get a commission from the manufacturer). Since, the economy was not doing too well even in the “affluent product” segment, I thought I would give it a shot!
I also asked if they could get a model with a Mark Levinson stereo system installed since I really wanted a great music system in the car and I also read that the cost to install them is not that much more.
On Tuesday, the sales person replied my email. And I thought that the email was rather rude. Sure, I asked for the invoice price, but the reply was not polite at all!
On Wednesday, Mrs Credit Card replied to the email. We said that we were unhappy with the tone of his reply and that we wanted to speak to another rep! Furthermore, Mrs Credit Card wrote an email to the manager to complain.
On Thursday, we got an email from the Manager with an apology. He mentioned that to get a Mark Levinson stereo system installed, it has to be ordered and will take 90 days and an additional 60 days for delivery. But he said that if we could something that was in his inventory, he would agree to sell us at the price we wanted! We agreed to his offer as I did not want to wait 4 months for another car!
Today – yes, today I finally got my car!
To pay in full or take an auto loan?
Well, I pretty much made up my mind about this. I wanted to take a loan. In all my previous car purchases, I paid the whole amount up front. In fact for the last one, I used my credit cards! (which earned me points and cash rebates!). But I did not want to simply write a check this time. So I checked out several rates from banks and it turned out that the rate for a new car is about 5+% (if your credit score is good). I decided not to make any downpayment as well.
The other thing is that I have not checked my credit score for over a year so I was interested to see what they came up with. Well, I got a 5.25% rate (not bad) and it turns out that the Lexus dealer pulled from Experian and credit score was 792 (uh – a little shy of the magical 800!).
So when all is said and done – Buying a new car goes against the grain of prudent personal finance. As of now, my Lexus has already depreciated. I guess I voilated Trent’s rule number 20 for getting rich – which is to only used cars!. But here is my little history about my car ownership. My first car was a very old boxy Toyota Corolla (the really square one that was made in the 80s). I drove it for years despite Mrs Credit Card (yes, we knew each other in college!) constantly bugging me to get a “nicer new car”. The a few years back when we moved abroad, we bought a brand new lexus, but had to sell it when we left (we lost a few grand on that – but at that time, the lexus RX series was new). Then, my last car was a 1998 Toyota Corolla with 150,000 miles on it which I bought for about $4,500.
Hence, for most of my working life, I have been driving 10 year old cars! I’m sick of it and really want to enjoy my car rides since my present job requires travel! (But alas, I found out that I’m not alone – SVB also belongs to the new car camp! and at least I know there will be someone from the pf world not frowning on my purchase!)
Recently, JD Roth asked his readers what they splurged on?. He didn’t ask me, but I guess my answer is on a brand new lexus!