We Bought a New Car!

Last week I asked you to help us buy a car or two and I thank you for your help. We were focused on finding a car for my wife, so that we’d have two snow-worthy, family-friendly, small SUVs. In that scenario, I’d be switching from my 2001 Ford Mustang to taking her 2004 Jeep Liberty. She test drove a number of cars and so far seems to like the Audi Q5 the best. However, that can be around $55,000 new and we were looking for something in the $35,000 range which means getting a used one. The used Audi Q5 inventory is small, so we went in another direction and got me a new car.

And, in case you weren’t aware, late December is the best time to buy a car.

Choosing My New Car

When I was buying my Mustang in 2001, I did a quick search for the three things important to me: lots of horsepower, convertible, four seats, and an acceptable price (under 30K). A 25 year old Lazy Man’s needs are not the same as a 36 year old Lazy Man’s needs. Today with a newborn and big dog, I need something bigger, more reliable, and safer in snow. Gas mileage is also more important to me now than it was back then.

With that in mind, I took to the Internet to find those features and Cars.com had a very handy search. When I checked off all the boxes, the Subaru Forester really stood out from the pack. I can’t seem to recreate the exact search now, but only the Jeep Patriot and Compass were with the Forester. (Now, there are a lot of competing cars such as the Honda CR-V and Hyundai Santa Fe which I looked at).

It’s funny what can really sell you on a car, but the big cargo space for my dog in the pictures had me. It helped that on a recent trip, my wife was given a Forester as a rental and heartily approved of the car. That was the single biggest reason why we switched our thinking to get me a new car first… we had already agreed on something.

Finding and Buying the Car

I went to Autotrader to see what was available in a new or used Forester. In New England, Subaru’s are more popular than in other parts of the country and there was plenty of inventory… for the base level of Foresters. For some reason there are few in the Limited trim (it lives up to its name) that has leather seats and a few other features that I was looking for. One option stood out from the rest, the Planet Subaru Dealership. They had a few new and used Foresters available.

This is going to sound like a commercial for the dealership, but I don’t get a cent for it. I just want to relay how they impressed me and how it might help others with their businesses. To start, they really knew their customers. Subaru Outback commercials have dogs in them and the dealership has a dog. He greets you at the door, but he doesn’t jump all over you. For the first time in about 6 dealerships we had a female salesperson, which broke the stigma of the slimy used car salesman who is typically male. Planet Subaru has a few other nice service level things like free new tires and batteries (though actually taking advantage of these things requires every service to be done at the dealership, which isn’t likely to happen). The salesperson had a number of things in common with my wife, drove the same car (a year newer), and lived for years about 3 miles from we moved away in California.

The dealership had a used 2011 Forester with 11,000 miles on it at the Touring (every feature possible) package for $23,000, a 2012 Forester Limited with 9,000 miles for $23,000 and a 2013 Limited for $25,000. I decided that I could do without all the features of the 2011 Touring edition, so I eliminated that one quickly. The dealership had to buyback the 2012 because of a minor problem that couldn’t be fixed in three tries (but was now fixed and under warranty for years). I immediately targeted it, thinking it would be the they’d want to get that off the lot to make room for the new cars and try to get rid of the “damaged” goods.

I was wrong. With the used car inventory, they weren’t getting any factory incentives like with the new cars. The new Foresters were typically more, but the year end sales brought them down. In addition Subaru was running a nationwide 0% financing for 63 months on new Foresters… and it didn’t apply to used Foresters.

How much was that 0% financing worth? At the dealership, I didn’t have the exact tool to tell me, but I did find an online calculator that helped estimate it for me. Now that I have access to a full computer with internet access, I can direct you to this Cars.com financing calculator. (Note: This isn’t an advertisement for Cars.com tools either, random search engine searches came up with these gems.)

The financing really closed the gap between the used car and the new one. With Massachusetts tax factored in the total cost of the $25,000 new car with 0% financing ($1000 down) was going to be a total cost of $26,563. PenFed is offering 1.49% for 60 months on used cars, which would make the used car a total cost of $24,784. However, due to the buyback red flag there was some question whether they’d even make the loan. If not, I’d have to go somewhere else or take Subaru’s 4.9% financing. At Subaru’s 4.9%, the used car would end up costing me $26,873… $310 MORE than the new car.

That sealed the deal. Despite my best efforts to buy a car that had been depreciated, I ended up with something new. Did I get a good deal? It’s always hard to say with cars. The Edmunds True Market Value of the car was $26,423 and the TrueCar estimated price was $25,320 with the average person paying $26,110. I feel that I at least got a very good deal, especially considering the financing.

While on that financing note, it is amazing how cheap credit has gotten for those who can get it. With three properties now at a 3.75% interest rate or below and a car at 0%, we’ve effectively been loaned a very large sum of money at very little interest. At the same time, we are careful to not let the easy credit go to our head and buy more than we can afford.

Now I wait until the spring to sell my Mustang privately, hopefully getting the $5000-$6000 of Kelly Blue Book value left on it after driving it for 12 years. I can only hope the Forester serves me as well.