Yeah that’s right. If you haven’t been with me since the beginning this won’t look like much of an accomplishment. You might think differently when I tell you I paid for the car in less than a year. I drive no piece of crap either, this car was brand new when I bought it. The original selling price including taxes would have been over $25,000. But I couldn’t afford that, so I got creative.
I bought my 2008 Honda Accord in January of 2008. It was my first new car since high school and I had been prepared for the purchase for years. My last car was basically done, and so it was time to buy a new car. I test drove a few different cars and decided on the Honda Accord for reasons you really don’t care about. I could have walked into the dealership and told the guy what I wanted and paid sticker price, but I’m not that kind of guy.
Even back in January of 2008 the car dealerships knew it would be a bad year, and I used the knowledge against them. I sent emails to the five closest dealerships telling them I knew it would be a bad year and they would want to simply move cars without caring too much about a big profit. I asked each dealership to send me their best possible price out the door (OTD). Asking for an OTD quote keeps them from being able to tack on some hidden fees later.
Some of the dealerships offered prices I thought to be offensive, but eventually I had whittled the field down to two. Without telling the other dealership who I was talking to, I let them compete for my business until neither of them could continue to go lower. Instead of paying over$25,000, I paid $22,500. In this current economic environment, I probably could get the price lower.
The dealership was very nice and my car was waiting for me in the showroom when I arrived. The Sheconomist, myself, and my dad took it for a quick spin to make sure all the bolts were tight and then went to talk to the finance guy at the dealership.
If you think the salesmen are bad, you’ve never dealt with the finance guys. Every car salesman dreams of doing the financing because that’s where you really make bank. I said no to every product and service they offered to add on, just like you should. At this point you might be asking yourself why I didn’t go through my own bank to get the car loan. The said reality is the going rates at the dealership were better. Though Honda does have a financing arm, the best rate of the day was through Chase. I was pleased with this since I already had a credit card with them.
The interest rate I received sounds high today after what we’ve been through since January 2008: 7.19%. These days I could probably get 1.9%. Nevertheless, I had no plans to take three years to pay off the car. My goal was to do it in one.
My down payment was roughly 50% of the price. I’d never written a check for that amount before, it felt good. So I was left to pay a bit more than $1,000 a month if I wanted to reach my goal of paying it off by January of 2009. To my surprise, I paid it off earlier that that. I mailed off my last check in the middle of December and received the title to my car this past Friday. All in all I paid less than $500 in interest.
I’m very proud of myself simply because I set an ambitious goal and achieved it. I can now start 2009 without the thought of making debt payments. This is a discipline I hope to carry with me into the future, as someday I’ll have a mortgage, and who knows maybe I’ll take out some student loans and go back to school. Either way, I know I can handle paying off the debt.
If you would like to know more about how I bought my car and my negotiating tactics, start with my original post and then email me. I offer my services to help you negotiate a price on a vehicle as well. I only ask for 10% of the savings. So if I save you $2,000, I get $200. Thanks for coming with me on this journey, lets see what the next adventure is.
Here is an actual picture of my car, taken yesterday.
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
