I paid off my car loan! October 19, 2010

You may recall that, a little over 2 years ago, I bought a car.  I had gotten a new job that I was going to need to drive to (no direct public transportation route).  So, between asking around, reading my consumer reports, and doing a few test drives, I decided on my car.

But how was I going to pay for said car?  I didn’t really have enough in savings.  Well, maybe I did, but then my savings would be completely depleted, and I wasn’t too keen on that.  So I tried to figure out where my loan could come from.  This was back in 2008, when people were still buying cars.  In fact, I’m pretty sure it was at the boom where everyone was looking for a fuel-efficient car, due to the ridiculously high gas prices.  So, unless I was going to buy a Hummer or some other gas guzzler, I wasn’t going to get a cushy 0% financing through the dealer.  In fact, when I asked them about their financing, they actually couldn’t compete with the rate that I was pre-approved for.  I had gotten my loan from a local credit union through AAA.  It wasn’t the best deal, but 4.49% was as good as I was going to get.  Yes, I could have bought a used car.  Yes, I could have looked harder for a better loan, tried harder for a better deal, or used up my savings instead.  But I didn’t.  I wanted a new car because I knew it would get good gas mileage, be safer, and I was going to drive it for as long as possible.  And yes, car loans are cheaper now, and I have enough money now, but I was in a bind at the time.

I hated having a car loan.  I wanted to get rid of it.  It was my highest interest rate loan (since my student loan rates kept dropping), and I wanted it gone.  But I was a bit uncomfortable getting rid of all that debt without having a good amount of money in savings.  So I made a deal with myself:  I’d save up for two years of expenses, then I’d pay off my car loan.  Mathematically, that doesn’t make the most sense:  the interest I earn on savings isn’t as high as what I’m paying on my loan.  Psychologically, though, it makes perfect sense for me.  Still, I set a goal in my mint account to get my savings to the magical 2 years expenses goal, and waited.

So, October 2nd, I transferred money from my ING savings to my ING checking, and then had ING checking mail out a check.  The check went out October 4th.  A few days later, I logged into the credit union account, and my loan account was GONE!  And that’s it.  I PAID OFF MY CAR LOAN!

Doing all the calculations, it turns out paying 3 years early saved me only $753.52 in interest.  I was informed when I signed the loan that financing for 5 years would cost me $2109.70 in interest.  This also means I ended up “wasting” $1356.18 in interest.  I feel a little silly about that.  But what’s done is done.  Lesson learned.  Moral of the story:  Don’t take out a loan if you don’t have to.  And my hope and plan is to never take out a loan for a car ever again.

Still, paying off my loan feels absolutely awesome.  I’m really excited about my personal finance plans.  Watch out, student loans, you’re next!

Complaining sometimes pays off February 4, 2009

Some of you might remember the whole saga of buying my car.  For those of you who don’t, basically, I had to wait for my car to arrive (which, looking back, wasn’t horribly bad, because it is in fact more efficient to have a pull system than a push system (thanks corporate 6Sigma discussion)).  But I felt I had been mislead because they gave me an initial date for delivery, and when it didn’t arrive by then, they said they had initially told me it was going to come a few weeks later than that.  So, I was frustrated.  And I made my frustration heard.  I complained to the salesperson that was in charge of my purchase, as well as the manager and anyone else that would listen!

So, when I finally got my car, they knew I wasn’t quite 100% happy with the way things worked out.  And Toyota demands high customer satisfaction from all of their dealerships.  And in general, it’s a good idea to keep the customer happy, especially when it comes to a rather large purchase (or potential future purchases by me or others).  They said when I first drove off with my car that they’d see what they can do for me in the future to make up for it.

Well, my 5k mile maintenance was due.  So, I shot an email over to the salesman that I had bought my car from, asking him if he knew of any discounts or promotions going on right now in the service department.  I did that with the intent of seeing what he could do for me!  So sneaky!  He called me on my cell AND my work phone to tell me to come find him when I get there, and they’ll take care of everything.

So, when I dropped off my car, I went down to find him.  He was with another customer, but he saw me and came towards me!  He then told the manager that I was the one that they should take care of.  So the manager came upstairs to the Service Center (how weird is it that the sales floor is below the service floor?  so many cars up there!) and told the guy up there that sales was taking care of it.

And that was that.  Free!

Of course part of me wonders if that’s always a free service under the warranty (the maintenance).  So maybe they were just trying to make me feel better.  Either way, it’s good to know that they are trying to stay on my good side.  I wonder how many more times this can work…

Moral of the story:  sometimes it pays to make a bit of a fuss.  Don’t be ridiculous; be reasonable.  And be appreciative when they help you out.

It’s my blogoversary! October 27, 2008

Well, that’s not exactly true…

I started blogging in general in 2005, when I mostly discussed happenings around MIT.  I started discussing personal finance related topics in May 2007, and made the transition to WordPress in October 2007.  So it’s been about a year since I’ve started writing on this blog.

I suppose, as is the trend around the blogosphere on your blogoversary, you take a look back at your year of blogging.

So let’s begin!

Financial achievements and changes:

Opened my Roth IRA in July 2007, met goal of fully funding it for 2007.  (somehow didn’t post about that one).

Enrolled in my company’s flexible spending account (and did that again at my new job).

Got laid off

Got a new job

Bought a car

Since December 2007, through saving, paying down student loans, and contributing to my retirement funds (and getting a salary, of course), my net worth has gone up approximately $17,000.  I’m pretty impressed by that.  Though I have to keep in mind that my method for calculating my financial net worth also includes my car, both the Kelly Blue Book value for how much it’s worth (assets) as well as my loan amount (liability).  So currently, that number pretty much cancels itself out (since the car is still valued pretty highly, but I haven’t paid off much on the car yet).

I’ve continued to make most of my financial transactions automatic if possible.  My ING accounts take money from my other accounts a few times every month, my Roth IRA also deducts from my checking account once a month, as does my student loan company, my insurance and 401(k) contributions are taken directly from my paycheck, my car payments are withdrawn from my bank account, and some of my utilities are also withdrawn directly.  However, I do go online and pay my other utility bill every month, cable and rent I have to transfer myself every month, and I sign online to pay my credit card off each month.  I think with these expenses, they change a bit each month (or there is no automatic option available) and so I’ve chosen to pay those off in that way to make sure I have enough money in the correct account.

I have to attest that I think making the monthly expenses automatic is pretty key.  You make sure that you pay your bills on time, which means you don’t have to pay unnecessary fines/fees.  You just have to be careful not to go on autopilot in terms of spending.

Okay, to prevent this from going on too long, I think I’ll talk more about other blogoversary-type things in another post.

Woo, blog blog blog!

Gas gas gas! October 1, 2008

Today I did something that I’ve never done before.  It may come as a surprise…but today I pumped my own gas.  For the first time.  Ever.

Yes.  It’s true.  Now, I’m not a spoiled or lazy limo rider or something like that.  I got my license in New Jersey, one of the few states where you can’t pump your own gas.  And I rarely drove in high school anyways.  Take four years living in dorms in Cambridge, and two years taking public transportation, and you have a girl who didn’t really need a car.  And whenever I did need gas (borrowing my boyfriend’s car on occasion), the nearby station had full serve (and the cheapest gas in the area), so I didn’t have to pump my gas there, either.

And so today came…I was halfway through my drive to work when I noticed “the light” go on.  You know, the warning light that says that you only have a gallon or two left in your tank.  By the time I got to work, the needle on the gas gauge was nearing the zero line.  I hopped online briefly and took a look at GasBuddy to see what the prices were for gas in the area.  And since the nearest gas station to work was a little pricey, I bought a few gallons to make sure I got home, and rode the rest of the way home feeling a lot safer knowing I wasn’t running on fumes.

The funny/sad part is, I probably could have made it home…or at least known if I could make it home, had I read a little further into my owners manual.  When looking at the manual to see what gas level the warning light signified, I saw something about other information besides speed, miles, etc. on my dashboard.  I figured that was only an option for the “fancier” version of my car.  But nope, it turns out my car has all sorts of information!  While one meter shows the odometer and a few “trip” odometers, the other meter shows, among other things, the time, the outside temperature, instantaneous mpg, average mpg, and, the one that would have helped me out:  miles left on the tank.  Yep, they have an estimate for how much farther I could have gone.  But I didn’t try that out until after I’d gotten some gas.  Well, I guess now I know for future reference.

The mpg information is pretty cool, too.  The instantaneous mpg value fluctuates quite a bit, which makes sense (based on your speed, incline, gear, etc.).  The coolest moment was when I saw the reading go up to 99 mpg.  Yep.  It was pretty cool.  It was only on there for a moment, but I was kind of excited about that.  And I’m glad to report that my average mpg is above 30.  I don’t remember exactly what it’s at, but it’s pretty good.

So, there you have it.  I’ve finally pumped gas.  It’s really not hard at all!  I’ll keep you posted about the gas mileage I’m getting!

I finally have my car! September 16, 2008

It all started when I got a new job.  Remember that?  Those were good times.  I knew I was going to have to buy a car for the job offer I accepted, but I figured I could work my way through that slowly and surely.

Then I started narrowing down my choices.  I knew I wanted a Toyota Corolla or a Honda Civic.  So I went to a few different dealerships to see what kind of deals I could get.

This is where it gets tricky.  When I originally put down my deposit (on August 23rd) they told me that I’d have to wait a bit for the car to get here.  They didn’t have any meeting my specifications (not too fancy, not too basic), as Corollas are in high demand due to the recent rise in gas prices (though they’re going down…but that’s another story).  They told me that the car should be in NYC by around the 28th, at which point they’d have the VIN for me (so I could finalize my insurance and everything).  They also said that after it hit New York City, my car would take about a week to get to Boston.  And I was okay with that.

The 28th rolls around.  No VIN, I don’t think it had even reached NYC.  A week passes.  By then, the car should be in Boston.  No such luck.  Basically, I kept calling.  Friends suggested I call and threaten to go elsewhere (or not just threaten, but actually go elsewhere), or demand extra perks for having to wait so long.  On September 9th I called a few more times.  By then, the car was supposedly in New York City, but they still didn’t have the VIN.  I was pretty angry, because I was then told that they had originally told me that the car would be here by mid-month…which is NOT what they had originally said.  I called and spoke to the manager.  I started out trying to be really demanding, but he somehow had a way of calming me down (that’s why he’s the manager).  But I believe talking to him helped, because they knew I was serious about my car…maybe. And that maybe they’d give me a bit of money off of the car, or give me a few free oil changes or something.  He suggested that he could get me a rental car for the interim.  His main excuse was that the transit from wherever the cars came from was delayed by all the hurricanes.  I wasn’t so sure about this.  By the 11th, I was assured that my car would be in Boston by the 12th-15th…which calmed me down a bit.  I finally knew the end of the debacle was in sight.  By then, I figured it was worth it to just wait instead of see if I could get a car through another dealer more quickly (and I didn’t want to go through the whole hassle again).

The afternoon of Friday the 12th, I get a phone call.  My car was here!  FINALLY!  Of course by that time, it was too late to finish up the financing before the weekend…but I figured that I could go in on Monday to get the loan finished up at AAA.  I plan with the dealership to come in on Saturday to do all the paperwork.  I get a call Saturday morning…the dealer informs me that they don’t have the seal yet.  I really have no clue what that is.  I agree to wait until Monday, when they should have the seal, because at this point, I’m figuring I can’t do anything until I have the check for the dealer.  That, and I felt pretty lazy.

Monday, I head out to the dealership after work.  I’ve called the insurance company (since I finally got the VIN) and had my insurance selected and the information sent to AAA for finishing up the paperwork.  I sign all sorts of forms, and have the necessary forms faxed to AAA.  They try to sell me all sorts of different “packages”, including Lojack and assorted teflon coatings and things for the car.  He even said that I could extend the warranty to 8 years for almost $2000 extra.  I am almost certain I don’t want that, but call home quickly to confirm.  It was funny, because the guy said “I wouldn’t let my brother buy a car without this package” in response to the warranty and lojack.  He rattled off a statistic that a Carolla is the 3rd most likely car to get stolen.  I head home after all the paperwork and wait.

Today, I went to work as usual, but took a few hours off to get this car thing all settled out.  I’ll admit, it’s pretty convenient that I am allowed to modify my time at work, which allows me to use some time for appointments and the like, and just make up the time within a few weeks.  Anyway, I get out to AAA, and sign all sorts of papers, and then drive over to the dealership with a hefty check.  When I show up, my dealer seems a bit worried that they wont get everything done by the end of today (since it took me a bit longer than expected to get to the dealership).  I cringed, but hoped for the best.  I drive back to my place (I borrowed my boyfriend’s car) and try to get some work done.  Within the hour, I get a call from my dealer saying that everything should be done by 5pm.  I get out, take the T to the dealership, and sign a few more papers, and drive off.

As I’m driving away, I’m freaking out a little bit.  It’s like a new toy…it’s exciting!  And I’m having trouble coming to grips with buying a new car.  But the funny part is, it’s the biggest purchase I’ve ever made, and I am not regretting it.  Which is really weird for me…I’m always second guessing my decisions, and looking back and wondering if I did the right thing.  But in this case, perhaps I know that, at this point, it’s pretty much too late, I’m in it for the long haul.  And I’ve wanted/needed a car, and this fits my needs.  So I’m happy.  It’s a big step, a “grownup” step, and a pretty large addition to my debts.  But I think I’m going to be okay.  It’s a weird feeling.

Whew.  So, yes, I probably should have stopped waiting sooner, and demanded more.  But I think they’re willing to give me a free oil change or two.  And I’ll be happy to finally have a car of my own.  I’m excited to see how many miles per gallon I can eke out.

Have any of you had experiences like these?  What “grownup” steps are you taking?

I bought a car! August 24, 2008

Yep, you read correctly.  I bought a car.  Technically I don’t have it yet (it’s in transit) but I’ll have it in about a week.

I first went to Herb Chambers Honda to test drive a Civic.  When I got back, all I really wanted to know was what sort of price they were going to be able to give me.  But they definitely gave me a bit of a runaround, and I felt very pressured to buy the car right then and there.  I was there alone, and really wasn’t ready to make any decisions just yet.  They kept pointing out that they could accommodate any monthly payment my budget would allow.  I kept asking what interest rates they could give me, or the lowest price they could sell it to me at, and they continually changed it from rate to monthly payments…very sneaky.  Because, as you and I know, you can basically make a monthly payment of any amount, as long as you stretch out the payment schedule long enough.  And who wants to pay all that extra interest?

So, that was Tuesday.  I was busy the rest of the week, until Friday evening.  This time, Aaron came with me.  We went up to Commonwealth Motors.  I took another test drive with the Civic they had available.  The woman that showed me the car was really friendly, and took me around the dealership to see all the benefits they had.  I could tell what she was doing, but I let her show me around.  We started talking about cars, and I asked if they could go any lower on the price.  Like at the last dealership, she got her supervisor, who is more likely to actually make a deal.  So he said he could go as low as $17600, which was okay, with an MSRP of $18,430 or so.  Still, I wasn’t quite ready, and wanted to test drive other cars.

So, Saturday morning, I got an email from Herb Chambers Honda (yes, I gave them way too much contact info).  I called them at the number they mentioned, and the guy got his manager, who said they could probably match the price I got at Commonwealth, and that I should come in.  Well, Aaron and I headed over there, and since his car needed a tuneup, we dropped it off at the nearby dealership, (free parking!  except for the cost of the repairs not covered by his warranty)  and headed over to the Honda dealership.  It turns out that they didn’t have any more of the Civics in blue, which was the color I was hoping for.  They did say that they were willing to go as low as $17550, but that they couldn’t go lower than that.  I wasn’t too keen on buying a car without trying any other types of cars, and I also knew that Commonwealth had a few blue cars coming in, so I figured I’d wait and get back to them.

The manager actually offered to have the salesman drive us over to Herb Chambers Toyota in the manager’s car, which I thought was really nice.  Maybe they were hoping we’d come back, or they just wanted to be good guys, but either way, it was a good thing.

We got to Herb Chambers Toyota and had to wait around a bit.  All the salespeople were busy with other customers.  However, a man named CK, who apparently works more in the internet sales department, saw us waiting and offered to help.  I appreciated that.  I told him I was looking for a Corolla, and he had us go out on a test drive.  I found the car to seem a little more “normal” compared to the Civic, which seemed to have a bit more “space age” look to it, especially when it came to the dashboard.  I also noticed that the Corolla had a smoother ride.  I guess they say that it has a looser suspension, which means you feel less of each of the bumps on the road.  The salesperson at Commonwealth said that that meant that the Civic and other cars that touch the road more are safer because you’ll always be on the ground.  I’m not sure how much I believe that.

So, we talked a bit more with CK, and he was really nice.  I felt a lot more comfortable there than at the other dealerships.  I collected as much information as I could, and then Aaron and I headed over to the Super 88 food connection to grab some lunch.  It was pretty darn tasty.  I was going back and forth on which car I preferred.  I knew that really, it was my decision, not his, not my family’s just mine.  And I really hate making decisions (it took us a while to figure out which place to get food from!)

In the end, I decided that the Corolla just felt better.  The smoother ride and more normal looking/feeling car appealed to me.  Not sure if it was because it was the last car I looked at, but either way, I figured I couldn’t really go wrong.  I figured that if I could get a similar deal on the Corolla as was promised on the Civic, I would be happy.

So we headed back, and CK found a car fitting my needs (the Corolla LE) and was looking for a blue car for me when he found the listing that showed that ZERO blue cars were being made for them.  I’m not sure how exactly that happened, or what exactly that meant, but I had to decide if the color was that important.  Luckily, my second choice color was available in the trim level I wanted.  I opted for the LE over the base (CE) because it had power locks, power windows, cruise control, and a few other options.  Yes it’s more expensive.  But I wanted to be happy down the line.

So I was handed off to the actual salesman, and he was able to give me ~$1000 off the MSRP.  In retrospect, I should have asked if he could go lower, and I’ll probably be kicking myself down the line for not trying to get it lower, but there it is.  I signed forms that scared me, and put down a deposit.  My car will be in off the trucks in about a week.

It’s a strange feeling.  It was such a big decision, moneywise.  I know I’ll be happy in the end, but I also know I probably could have gotten a cheaper car if I had gone for a used car.  I’m getting my loan through AAA, like I mentioned before, and they’ve got a rate better than the dealerships could offer (they don’t have deals on the fuel efficient cars because they’re already in such high demand!)  So, I’ve got to decide the length of the loan (likely 3-5 years).  Luckily, they don’t have any added fees for prepaying (I wonder if that also means if I completely pay it off early they wouldn’t have a problem with it) so I could technically get rid of that debt sooner.  It actually is the lowest APR of all my loans…4.49%.  My fixed rate student loans are at 4.5% (not too much higher) and my variable rate loans are currently at 5% (though that wont always stay).  It’s another barrier towards being debt free.  And unlike education, you can’t quite label a car purchase as “good debt”.  But I do plan on having this car forever (relatively speaking), and so I’ll try to get my money’s worth.  I just need to buckle down and work even harder at paying off my debts.

Next step is getting car insurance.  I’ll let you know what happens with that.

And now it’s time for bed.  I’ve got to get up early for work tomorrow so that I, you know, can make some more money to pay off all those bills.

Buying a car: updated August 17, 2008

So, it seems that there are a few posts floating around the blogosphere about buying cars.  First off, Kendall followed up her last post with a more detailed description and reasoning behind her purchase.  I also saw that Trent at The Simple Dollar posted a discussion on Leasing vs. Buying new vs. Buying Used.  And then The Consumerist linked to a post at the Consumer Reports Cars blog about the most fuel efficient cars in certain cost brackets.  So this has definitely helped me with my decision.  I’ve also found myself looking around at the cars near me on the highway (but I keep my eyes on the road!).

Reading those posts, along with talking to friends and family, I’ve narrowed down my choices quite a bit.  I’m thinking my top choice is a Honda Civic, and my second choice is a Toyota Corolla.  I made this decision based on price, gas mileage, other owners’ experiences, and style.

I’m leaning towards a new car, since I plan on owning a car, and as my friend Patrick said:

Basically my advice was to buy a “lower grade” new vehicle vs. “higher grade” used vehicle. I bought a EX Honda Accord because I was looking for leather and sun roof and speed, etc. In the end I should have bought a brand new Honda civic (or similar) for the same cost without all the amenities. It’s hard to know what’s happened to your car before (mine is fine, but it has some quirks that always makes me nervous when something seems like it might go wrong).

Basically my advice was – if you’re on a budget and you can buy a reputable good car w/o every amenity, that’s better then buying a used car with everything “blinged out”.

I thought that was pretty good advice.  And I agree with him.

As for how I’m going to pay for the car, this is where all the tricky personal finance stuff comes into play.  I’m starting to realize that I might just have to get a loan.  I could technically use up all of my savings to pay for the car, but that really is not the best idea.  And while there is not likely to be a loan out there with lower APR than my ING account is getting, it’s better to have a bit of savings around than to have less debt (in my opinion), mostly because it’s important to have an emergency fund sitting around.  So yes, mathwise, it’s not the best choice, but emotionally and for hedging against going into more debt if an emergency happens, the loan is a better choice than taking all the cash out now.  Besides, I’ll still need to pay for insurance (another whole collection of decisions).  As for where to look for loans, I’ve gotten a bit of advice.  My friend Craig mentioned that he found a local credit union that has pretty good rates, especially if you have another account there, and that the credit union also discounts your rate if you do automatic payments.  And my mother pointed out that AAA (which is probably a good thing to have anyway if you have a car) has car loans for pretty reasonable rates.  So I’m looking at that too.  I’m guessing it’s a good idea to have the loan ready before you buy a car, but I’m thinking I should at least go take a few test drives to determine if I like the cars that are at the top of my list.

Well, hopefully I can get over to a dealership some time this week to get my next car buying step going!

And thanks guys, for your advice!  I really appreciate it.