Readers, be forewarned. This was not a frugal car choice for Mr PoP. We knew long ago that whatever “fun car” Mr PoP ended up with it wouldn’t be frugal. And this thing sitting in the garage is far from frugal.
But he’s sure enjoying it mightily, and we tried to make the purchase without doing excessive damage to our finances. Here’s how that is shaking out.
Step 0 – A Year’s Worth of Car Savings
For all of 2016, we had put aside $1,500/mo into a money market account for Mr PoP to use on a car. That meant we had $18K specifically earmarked for him to use. But once Sunny was out of the picture, we both had a strong suspicion that the upfront price was going to increase a bit.
Step 1 – Selling Sunny
We literally tried to give Sunny away to friends that we thought would give her a good home. Sadly, they weren’t quite up for restoring her to not only her former glory, but as a safe vehicle to drive around in. The rust was truly that bad in some spots. So, Mr PoP put her up on Craigslist. After turning down an offer to trade Sunny for a vintage motorcycle, Mr PoP sold Sunny for $600 to a guy that rented a trailer and drove 4 hours to pick her up. We hope that means he thinks she’s worth restoring and isn’t just being scrapped since she really is a beautiful car. No guarantees there, but it’s also a huge relief to have her off our patio now, too! (Since if you recall, we were the weirdos that stored a car on the patio outside our bedroom sliding doors for 2.5 years to avoid paying storage fees.)
While we didn’t rip off the Mercedes Benz hood ornament as a souvenir before shipping her down the road, Mr PoP did accidentally keep the original Mercedes Benz toolset that came with Sunny since it was in the garage the day we sold her. That toolset feels like a fitting memento of Sunny so we won’t be calling the guy to mail it to him.
Step 2 – Searching for *THE* Car
Mr PoP spent a non-trivial amount of both time and money in his car search. Items like gas spent on a couple of mini-road trips to test drive Porsche 911s (the last gasp of looking at other cars before Mr PoP decided he didn’t want any regrets when he’s 90 and went with the NSX!) weren’t counted in this total. But the 2 pre-purchase inspections, as well as a last minute flight and rental car to go see the darned thing in person were. These were sunk costs, but it meant we spent ~$1,197 before even buying the car.
Step 3 – Get The Best Price You Can
Mr PoP did just that. He ended up buying his NSX for $38,000, about 10% less than the original list price of the car. While perhaps not a screaming deal on this car right now, Mr PoP considers it a fair price considering what other NSXs seem to be selling for around the country at the moment.
Step 4 – Then Pay To Pay, Pay to Get It Shipped Home, and Pay to Insure It!
A $30 wire fee. Annoying, but they were good about getting the wire done for Mr PoP in a hurry and Mr PoP says the bankers were very kind to him (a pleasant experience after the grief car dealers in 2 different states had given him within the previous week!). Then we also had to pay $750 to get the car shipped to our house. Insurance surprisingly wasn’t too bad. $184 for the next 4 months (until renewal) to add the car to our existing policy with the other car.
Step 5 – AND Pay The Tax Man!
We also had to pay 6% tax, title and license fees, which came out to $2,410. Mr PoP ended up not getting a fancy license plate, so he’s just got one of the lame orange ones on it right now.
Oddly, when Mr PoP went to the DMV to do all this, the kid behind the counter acted somewhat relieved when Mr PoP was not going to argue with him about paying tax on the car purchase. Do people really berate DMV folks over paying tax?
This is where our numbers stood once the car was in the garage:
- + 18,000 – one year worth of cash savings
- + $600 – cash from selling Sunny
- – $1,197 – sunk costs in car search
- – $38,000 – purchase price
- – $964 – fees to purchase and ship the car
- – $2,410 – tax, title, and license fees
- -$23,971 – Total above what was already set aside
We had extra cash to cover the overage, but that in combination with the $11K we need to drop into our Roth IRAs soon would take pretty much all of our remaining cash buffer. So, after looking around, we decided to finance the car purchase since our credit union offered us 1.49% APR for a 3 year, $30K loan. The payments will be fairly ridiculously high, but we’ll end up paying ~$600 in interest over the course of the loan to keep $30K working for us. If the stock market returns < 1.49% annually over the next 3 years, we’ve made the wrong choice. If it doesn’t, we’ve made the right choice.
We typically try and avoid such short-term market bets (and yes, for us, 3 years is a short-term market bet), but at 1.49%* it seemed worth taking.
* Sidebar – the effective rate is probably going to be even less than 1.49% since adding the car loan to our credit union portfolio will increase the annual member rewards we are eligible for. Based on past years, my guess is that it’ll get us another ~$20 or so back every year as well, which is pretty sweet and lowers the effective rate of the loan even more.
The only slight hiccup is that Mr PoP let Florida keep the title when he paid the taxes, so it’s going to take a little time for us to get that back and then send it to the bank to get the loan. Fingers crossed the State of FL doesn’t take *too* long since I don’t want to lose the 1.49%. =)
Where the numbers should stand once the loan is finalized (hopefully next month)…
- – $23,971 – total above cash already set aside
- + $30,000 – loan from credit union
- + $6,021 – net cash added to the mix, enough for the first 7 payments on the car….
This isn’t the end of the money story on the car. While we’re hoping it’s not a money pit, there are some maintenance items Mr PoP wants to take care of before considering her a true daily driver, and despite DIY-ing some, just the parts on some of the items he’s considering might be a little pricey.
But at that point, we’d probably feel comfortable dropping back down to one car, and selling the other car will be a (small) offset to paying the loan down.
So, while this was definitely not a frugal purchase, it’s definitely a once-in-a-lifetime kind of purchase that we’ve tried to do the least damage to our finances with.
How do you think we did? Anyone have a line on a car loan that we can get for an even better rate than 1.49%? And more importantly, any name suggestions for the NSX?