Some of you might remember that quite a while back, I debated getting a second car, and at that time, our household decided against it. But last fall, our one-car situation came to a head, and I bit the bullet and bought another vehicle. My choice: a Toyota Prius. Last week’s guest post about choosing a hybrid vehicle reminded me to share my decision-making process and how it’s going now.
The decision-making process
I researched a lot of cars, hybrid and non. My choice came down to the mileage — how could I resist getting twice the miles per gallon of our Subaru, at about the same price as an average small sedan? (I went for the bottom-line Prius, not one with any added options. The dealer asked, “Don’t you want the solar moonroof that cools your car automatically?” and I had to tell him, “I do, and I also want heated leather seats, a lot, but I’m not about to pay for them.” He declined to throw those perks into the price.)
When I finally decided a hybrid was it, I test-drove the Prius and the Honda Insight. I liked the solid feel of the Prius, the great mileage, the sound reliability scores, and the reasonable insurance costs.
Driving down the price
I used 9 ways to keep the price as low as I could, since I financed the purchase.
- I shopped through Costco. Their auto-buying program lets you talk with a specific contact at a dealership who can give you a flat-rate price. I used this service to price-check at the Toyota and Honda dealerships I shopped at. The Toyota salesman was exceptional; the Honda person less so. For both cars, I also compared Internet and email quotes from different dealers and scouring all the local ads for several weeks. I feel confident I got the best price — and the buying process was really easy and no-haggle.
- I compared interest rates. I bought when I did because Toyota was offering financing around 1%. I bought on the last day of that deal, with some hesitation — Honda had been offering 1.9% and then went to 0%. I should have listened to my gut, because a week later Toyota went to 0% for a few weeks before Christmas, but I consoled myself that 1% is still not bad.
- I counted maintenance costs. Toyota is working to build loyalty with special offers. One of these was free maintenance for a couple of years. Sure, the car won’t have a lot of problems during that time, but it’s an expense I won’t have to pay for now.
- I invested to protect my investment. I shelled out a little more to buy a maintenance plan — essentially like an HMO for my car. After the free maintenance period, I have several more years where I pay a copayment-type price for maintenance and repair. This helps shield me from having to pay for dealer service. It will help keep overall outlays lower while I’m still making payments on the vehicle. And it’s transferable, so if I decide not to keep this car, the maintenance agreement is a perk for a buyer. (I paid for this in full when I bought it — and the price was marked down to a very reasonable amount during a promotional period.)
- I took the opportunity to shop for insurance. And boy, was this worthwhile! I wound up finding an insurance plan that will cover both vehicles for $20 a month less than our old insurance on one car. We also got a less costly homeowner’s plan at the same time.
- I looked at the big picture. Because I drive three-quarters of our mileage, it makes sense to have a high-MPG car. Our total mileage has remained the same, but because my MPG has more than doubled, even having two cars, our gas costs have gone down by at least $20 a month.
- I just filed taxes … and get a big rebate. Through 2012, my state is offering tax rebates on the order of $2,000 for buying certain new environmentally friendly vehicles — including the Prius.
- I looked at the cost/benefit of new vs. used. With all those perks of a new car purchase, buying new made more sense for us. Because this car is a desirable one, I would only save a few thousand dollars if I bought a used vehicle — but I would get an older car, usually with high mileage, with much higher interest on the loan, no tax break, and no reduced-cost maintenance. Older Toyotas, which can be found at used dealerships like some Dallas Toyota Vandergriff used car dealers, can be a good option for those who may not have the money to buy a new car, or are looking to buy a car for a new driver.
- I staggered the age of our two cars. We also bought our original car (a Subaru) new. Both vehicles have fantastic reputations for longevity and owners loving them. The Subaru is now almost seven years old, with about 90,000 miles. With proper maintenance, I anticipate we’ll get another 200,000 miles out of it. By the time we need to replace it, the Prius will have been long paid off, so there’s no danger of having to take on two car loans. And maybe by then, we’ll either need only one car, or have saved enough money to pay cash for a new car.
The whole process was a lot of work. I put all the quantifiable factors into a spreadsheet that compared the monthly, annual, and five-year costs of the cars I was looking at. I didn’t choose the cheapest option, or the most expensive — but I came out happy.