I preach financial independence and responsibility everyday and to everyone. I have built a roadmap for financial success. I’ve personally proven this by increasing my net worth by 1700% in just five years.
Well, this past week I have lowered my net worth by 5-10% by buying a car. I didn’t follow the 20/4/10 rule or pay cash. I did get a good deal, which I will touch on.
I wanted a legit SUV or truck. I needed something and let’s be honest, wanted something, that could get me to the mountains during rough weather. My wife and I are very active and our little cars with roof racks just weren’t cutting it anymore. Again, this is a want and not a need. But I sold myself on the need part of it.
Let’s talk about what to do and what not to do. Because I did a little of both.
Let’s start with what not to do:
1) Trade in a car to a dealer
2) Go to a dealer to look. I was immediately in love with this future deprecating expense.
3) Fixate on what you can afford monthly.
4) Surprise your wife by buying it.
What I did do right:
1) Told the dealer I’m walking out if they push the vehicle markup.
2) Had financing and credit report ready. Would not let dealer run my credit.
3) Never accept their 1st, 2nd, 3rd, or 4th offer.
4) Look at the entire price. With tax, title, and fees determine the total price plus interest.
5) Used my back car buying service which allowed me an agreed upon below MSRP price and .50 off of my already low-interest rate.
In the end the house always wins. I’m sure they turned a profit. But does anyone expect a dealer to lose? Negotiating tip 101, both sides must win. Concessions will be made. Anyone who says they robbed the dealer is most likely telling fairy tales.
In the end, I got a good deal, felt it was a win, and got a vehicle that fits my lifestyle.
I did not put down 20% or finance for 4 years. The payments and vehicle are well below 10% of my income though.
Due to my amazing credit I have built up, I was able to secure an interest rate that was lower than average for 72 months. It would have been the same rate for 24 months.
I opted for lower payments in case I want to take a light month. Ultimately I’m going to pay it off in 2 years. Because I hate debt, so that’s just what I do.