Find Us On Facebook!

Tuesday, March 8, 2011

Buying a Car on a Budget

   I have been without a car for at least 6 months now. I made the mistake of purchasing a 1999 Pontiac Grand Am five 1/2 years ago and had nothing but problems with it. It was the first time I had ever purchased a vehicle from a car lot and I really had no idea what I was doing and no one to ask. I made the mistake of trusting a car sales man. :(
  The car was priced at $5000.00, and I was able to talk him down to $4500.00 with him paying off my car also. (I had $1000.00 down and a trade in.) My trade in was a 1989 Oldsmobile Cutlass, that ran like a gem, and didn't look bad either I just wanted a newer car. I was super excited that the Grand Am was only $4500 and went ahead with the deal the same day. -Mistake Number Two
  Since I had a poor credit score I went with the dealerships financial services - Mistake Number Three. I didn't ask many questions because I trusted the guy who was selling me the car. (That was Mistake Number One)I didn't ask or even know to ask about interest rates, all I knew was that I could afford the payments and I WANTED that car!

  A couple of months later my husband and I decided it would be easier to pay the car and truck loan together so we went to our bank to switch the loans there. 

  In that process I discovered my "new" car was only worth $2500, that's what the car's value was listed as in the Kelley Blue Book. I got ripped off $2000.00!

  I also discovered the dealerships financial services set up my loan with an interest rate of 17%! Which I found was an enormous amount, and a ridiculous interest rate. 

  There was nothing I could do about the $2000 I lost in the deal, but I did manage to switch the loan to my bank though I also had to finance a personal loan in order to switch the entire loan. It was worth it though, my bank lowered my interest from 17% to 6%. 

Lesson Number One: Use Your Bank to Finance

  After owning the car for around four months the steering wheel locked up. For some reason the fluid has leaked out so we replaced that, the car went through tires like were going out of style, one of the belts on the engine snapped while I was driving down the highway with my children in the car. The car was just a lemon, breaking down every other month leaving me with no vehicle until we had the money or time to fix it. Finally the transmission went out of it and sold it to a junk yard for $300.00. 

Total Money Put In This Car: 

Cost: $4500

Replaced Parts: $1500

Total: $6000

Sold for: $300

Lost: $5700

  Needless to say I learned my lesson! We are now in the process of shopping for a new car.

  This past Friday was the first day of test driving and really looking and we decided to stop and shop at Shottenkirk first. Why? Because they had a Dodge Nitro I wanted to test drive. In no way was I interested in buying the car, I thought it was over priced for the amount of miles the car had I just wanted to know how they drove. 

  We told the salesperson we were interested in test driving and he asked us to come inside and do some paperwork first. What? All I wanted to do was drive the freaking car! 

  After telling him we were interested in the Nitro and giving him some information he says that we can now go test drive, however instead of pulling the Dodge Nitro, which is what we were interested in he pulls up the Jeep Liberty. "Um, dude I said the Nitro." He tells me that the Liberty would be a better match for us, whatever. 

  So I drove the Liberty and during the test drive we tell him about our budget. Very firmly we inform him we have no more than $1000 for a down payment, and we can comfortably afford $260 a month and that it. He then tells us that he doesn't think the Liberty is in our price range but he has the Rendezvous that the KNOWS WILL WORK FOR OUR BUDGET. I get interested, it's a 2005 with 55,000 miles and it's a nice looking vehicle. I decide to test drive it, and I am ready to talk numbers. I wasn't planning on buying the car right away, I just wanted to know how much the payments would be. 

  Our Budget: $1000/down $260/month - That is our maximum.


  After talking to the financial people he returns to his desk with a paper with an offer of $3500/down and $280-$300/month. 

  He asks if we think we can come up with $3500/down. Now don't you think if I could come up with more money right then I would have, do you think it's like we said lets pay off as little of the car as we can right away. No, if we could hand over the entire price right away we would. 

  So we tell him no, not gonna work and he assures me that he can do better. He leaves and returns with the offer of $1500/down and still $280-$300/month. Now I know I told this guy $1000/down I don't care if it was $1001, I am now not paying even one penny more down because this guy has a thick skull and a lying mouth!

  I then remember that we have a birthday party to go to over the weekend and no way to get there at the moment, and the light bulb comes on. I ask to test drive the car for the weekend, telling him that the $1500/$280-$300 will work but I'm not signing anything until I know for sure it's the vehicle I want. In order to know for sure I need to test drive it more and would like to take it for the weekend. After some hesitation and a little excuse making I pull away with the car for the weekend. 

  I figured I sat through their crap all day, the least I was going to get for my wasted time was a car to drive for the weekend!

  We've decided against going through the dealership. We know that shopping around will lead us to a better deal, and a lower priced vehicle. 

  Rules For Buying a Car on a Budget
Be willing to walk away.

Stick to your guns, don't budge from the numbers you put out there. 

If you know you can not afford it, don't sign the papers. 

Shop around, you will most likely find exactly what you want for a fraction of the cost a dealership is asking. 

You know what you can afford and what you can't! 

Always ask what the car is actually worth, have them book it out. 

Always ask about interest rates. Anything over 10% is too high!

Always ask to see a CarFax.

Be sure to check the entire car over, even under the car and under the hood. 

Know if you will be able to service the car yourself, or if you will always have to bring the car to a mechanic. 


Don't be afraid to test drive the car for a couple of days before making your decision. 

Remember they want your business, you don't need theirs!

Other Articles in This Series:




  1. I'm also thinking to buy a car on a limited budget.

  2. I wish you luck! It is a very stressful journey, and it's turning out to take longer than I had expected. But, I'm not giving up.

    The more bumps in the road, the more interesting the ride I guess. : )

  3. It is not easy to shop for a vehicle with a tight budget. Money factors aside, car buyers should at least know a thing or two about vehicle maintenance before closing any deal. Your tips on vehicle shopping are very helpful.

  4. this article is great, especially for first-time car buyers. It's good to know there's help available out there so no one gets stuck with a car they don't want.


Related Posts Plugin for WordPress, Blogger...

What's Hot on Living Simplistically