This post started out describing the “great opportunity” local dealerships are offering me to trade in and upgrade my present vehicle and morphed into musings about finances and family budgeting. It grew so long I felt compelled to break it up. Part 2 coming soon.
I bought my 2013 Rav4 in October 2013, and for the first 14 months of ownership, it was the go car. Anywhere and everywhere M and I went together, we were driving the Rav. M has always had his own vehcile, and places where the Rav was “too nice” to travel (mountain roads for hiking or running), we took M’s former car, a 1999 CRV.
In December 2014, we acquired M’s present car, a 2007 CRV. It has replaced my Rav as the go car, and the Rav has been relegated to being the very nicest of commuter cars for my 16 mile round trip to the office each day. Saturday I am taking it in for its second oil change and 20K check-up and expect no surprises, and I realize at this rate of driving it will be 2023 or later before I reach 100K on the odometer. This is not a bad thing under any circumstances, just different than what we anticipated for this vehicle. When we were both working and commuting, it was not unusual for us to drive 20K miles or more on both vehicles in a year. These days we barely approach that for all vehicles (we actually have 2 others available to drive – a full-size truck and a work-in-progress Honda Civic project car) in a year.
But the vintage of my vehicle apparently makes it/me an attractive target for dealerships looking to boost inventory on popular models. Today I got my third call from my third dealership looking to entice me to trade for a new vehicle. I said no immediately. But the first time I got that type phone call was from the dealership where I bought it, and I chatted with the sales manager about it simply because I was curious. I wanted to understand what he could possibly offer me that would make the idea attractive.
His pitch – with my trade, he could get me into a comparable model 2015 Rav4 for a lower monthly payment that what I have now. Considering I work in accounting and worry about money for a living, I asked some very pointed, direct questions about interest rate and loan term to get that lower monthly payment. I asked no specific questions about what I would get in trade versus the cost of the newer vehicle, but he was able to confidently quote me a “lower” payment than what I had now based on the initial paperwork in his possession. Of course, my term would be back to 60 months, versus the 40-something months on the original loan, and with a simple calculator I figured out it would actually cost me several thousand dollars for a 2 years newer car.
I never did find out what financed amount he was basing that payment on or the interest rate he was using. It was simply impossible for him to offer me enough for my trade or attractive enough sale price on the newer Rav to make it worth my while. I thanked him for his time and interest in working with me and said it was not practical to trade my Rav for another vehicle at this time.
Now, when I purchased my car, I got a very low 0.9% financing for 5 years, and I paid it off about 6 months later. I hate car payments, hate that feeling of not owning my vehicle, and simply decided my aggravation with the payment was not an equal trade with whatever interest income I would make by continuing it and leaving the cash in savings. So there was that strike against the dealer and his offer. He was unwilling to share real numbers for trade, new vehicle, best interest rate, and I could not imagine a deal where he could make money and I could not lose money on such a transaction. There was simply no win-win possible. I am a very poor candidate for such great sounding ideas.
I suppose from the dealership standpoint it is a numbers game – call enough buyers with a car payment and a desirable vehicle and there are going to be a percentage that are drawn in by a newer model and the idea of a lower payment. I also happen to know many folks who believe having a car payment is just another monthly expense, like paying for electricity or natural gas or internet service. Once upon a time, a very long time ago, that was me. Fortunately life slapped me upside the head and I listened and learned the lesson.
For every personal finance decision, there is a person behind those choices. If you want to drive a new/newer vehicle every couple of years and don’t mind/can afford the payments, great! More power to you. In our case we’re inching ever closer to older and grayer years, where maybe I cannot or do not want to work as hard or as much and such choices have to be given a good, hard look with respect to how we spend our money. A newer version of my exact same car is not making the cut this year. Now that I have officially quit my full-time job and been reinvented as a part-time employee, I expect to be shouldering a larger contribution to our benefits next year. That’s a need; brand new wheels is pure want.
But maybe a kitchen update? Or more concrete? Or any number of other home improvements we would really enjoy right now? Those are still wants, but they are wants I would prioritize ahead of even newer wheels. Just not right now.