Committing the Cardinal Personal Finance Sin

There are some things that financially savvy folks don’t do. Buying a brand new car is one of them (unless you’re very rich). Mark and I, considering ourselves to be knowledgeable in the realms of personal finance, swore up and down we would never, ever buy a new car. But then we did. I’d like to say the numbers justify the decision. They do, mostly, but I’d be lying if I said that was the only reason.

As soon as we decided to move to the US, we knew we’d need to buy a car (we’re already breaking the norm by buying just one car for our 2-person household). Almost as quickly, we decided we wanted a Prius. We try to limit waste and lead an environmentally mindful life, which was one of the biggest factors in our Prius purchasing decision. Also, with gas prices on the rise, a hybrid like the Prius is a good choice for reducing personal gas expenditure.

Beyond the Prius’s gas mileage, however, we bought the brand. We like the association with environmental friendliness and forward thinking as much as we like the features themselves. We were buying our way into an elite group – like buying a luxury car that’s not quite a luxury car. That branding was probably the most expensive aspect of our car buying decision. With Mark biking and/or walking to work most days, and me not commuting at all, we probably won’t log more than 6,000 miles a year. Buying a Prius to save gas money would have been a false economy, even if gas prices doubled. In reality, we bought a Prius for a lot of the same reasons I buy Apple laptops – it does what we want it to do reliably and it’s a brand we want to associate ourselves with.

After deciding on the model, we further decided we prefer the newest (3rd Generation) body. Some people dislike the Prius styling, but I really like it, and especially love the newer models (2010 onward). We intend to keep this vehicle for several years, so also wanted leather interior. In my experience, leather is more durable, easier to clean and holds up better with children; by getting leather now, we shouldn’t need to trade in our car when we have kids. The Four, which is the lowest (cheapest) package option that includes leather interior, also includes a navigation system, which is a neat feature we knew we’d make use of living in a new area (and has already proved itself to be a huge help). When first scoping out (used) cars, we also ideally wanted a Certified Used vehicle, which would come with a year’s warranty.

With our specs determined, we scoured the internet (primarily researching through Ebay Motors, and AutoTrader). We searched for cars within a 1,500 mile radius, which included everything as far north as Seattle and as far east as Texas. Certified vehicles with low-ish miles (sub 50k) apparently run $2k or so more than comparable non-certified vehicles. We did find a cheaper non-certified 2010 nearby, but upon further research (thanks, CarFax), we discovered it had been in an accident and had damage to the chassis. While the damage was repaired, these types of accidents can cause unknown issues down the road, and it wasn’t a risk we were willing to take.

After a few days of research, I decided to check the local San Diego dealerships, in case they didn’t list their vehicles on any of the above websites. We then learned brand new Prius Fours MSRP just $4k above the 2 year old Certified used version. Our stomachs turned, but we were actually considering committing the personal finance cardinal sin. After weighing up the decision, we started thinking $4k was worth the peace of mind of a brand new, damage free vehicle with the full (extensive) Toyota warranty (including 2 years of maintenance).

We slept on it (twice) and continually discussed whether a new car was the right idea. We also continued looking at used inventory, but were still leaning toward new. When we arrived in San Diego, we arranged a rental car for the first few days, affording us time to prioritize home hunting over car buying and to avoid feeling rushed during the purchase process.

Ultimately, thanks to our research and a bit of negotiation, we paid $2k under MSRP ($100 under invoice), further reducing the premium of buying new compared to certified used. I’m still slightly embarrassed, and taking deep breaths to get over the idea… but also smiling… big. We are happy with the price we paid in the end, and we could not be more in love with our beautiful car – complete with new car smell.



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  5. […] decided we’d just get the exact same thing again. Same package and everything. Once again, we broke the cardinal personal finance rule and bought a new car. I maintain that for the current Prius generation (ie 2010 onward), the […]

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