We Bought a Car--the Right Way

We bought the Jimmy from a private party, from someone my husband had worked with years ago. Second mistake. The next day, the transmission died—no, I'm not kidding. Even though the seller reimbursed us for half the cost of a new transmission, we still were out an extra $750.

After tons of repairs that over time cost more than twice what we paid for the vehicle, rust falling off when we shut the doors, 146,000 miles, and another transmission slipping, it was time for a new car.

The search begins
Sure, we'd pass vehicles for sale in our neighborhood and see things in the paper that would catch our eyes, but after our experience with the last private party we bought from, we opted to take another route. This time we thought we'd purchase a new vehicle so we wouldn't have to worry about any repair bills.

We were happy with our Blazer and the service at Thorstad Chevrolet, a local dealer in Madison, Wis., so we started there. We wanted to work with the salesman who had sold us our Blazer. A friend of my in-laws, I knew Pat would do his best to find us a vehicle—without haggling us on price. The trust of the dealership is what kept us as return customers and Pat had told us, "I don't want to just sell you one car; I want to sell you five cars [over the years]."

Leasing would cost less, right? Not always.

"Lease payments depend on the residual value of the vehicle leased," according to Pat . This means the lease company determines what the vehicle will be worth when the lease is up—generally in two or three years. The higher the residual value, the lower the lease payment. But you might end up paying as much for a lease payment as you would a purchase payment.

"Leasing isn't for everybody," Pat adds. "You have to look at factors such as how many miles you drive a year. You're limited to a number of miles per year and if you go over that amount, you'll pay for the extras, usually 15 cents per mile."

To help figure out if you'd be better off purchasing or leasing try Home and Family Finance Resource Center's "Should I Purchase or Lease?" calculator.

When negotiating whether to lease or buy, make sure the dealer keeps the base price the same, Pat says. For instance, if you're looking at a $30,000 vehicle and you negotiate down to $27,000, that's also what the dealer should use as a base price for leasing.

We found that a lease payment on the van would be around $500, still more than we had budgeted for a car payment.

We started wondering if a van was really what we needed—and wanted. After evaluating, with Pat, the driving we do and considering how much we enjoyed our SUV (sports utility vehicle), we decided we didn't want a van—at least right now. Maybe the next time, once we need to haul half of a soccer team around.

Pat steered us toward several high-quality used vehicles, mainly lease returns. Many had new-car warranties remaining or extended warranties available. A beautiful gold, 1999 Blazer, fully loaded, with only 29,000 miles, sat on the lot. Did I want to test drive it? Of course I did. It drove great, had tons of options, and the price was within our budget.

So, this was it. I got the information from Pat including the make, model, year, miles, options, and vehicle identification number (VIN).

Financing options
The next day I visited my credit union and found out firsthand the benefits of a credit union auto loan. My credit union offered very competitive loan rates and no prepayment penalties in case we paid the loan off early.

Covering your acquisition
We were preapproved for the loan, I loved the vehicle, my husband liked it—we wanted it. It was the right price, had the right options, the right color. It was sold—to somebody else.

I was devastated. Now what?

About a week later, Pat called and told me about a 1999 Oldsmobile Bravada on the lot, much like the Blazer that slipped through our fingers. Being a GM model, Thorstad still could service it. I previously had glanced at it, but wasn't sure about the price. It cost more than the Blazer but the dealership would work with us. Plus, there were 11,000 miles/eight months left on the warranty—because it had 10,000 fewer miles than the Blazer had.

Back to square one. I quickly called the credit union to see what the Blue Book value was. The value again was more than the asking price. On to the test-drive.

It drives great. We actually like it better than the Blazer we had our hearts set on.

By the time we're ready to make our next vehicle purchase maybe we'll be ready for that minivan. Or maybe we'll feel more comfortable with a much higher car payment. But until then, we're happy with our purchase, though my son still tells me he wants a car with a TV in it.

• Save the step of longing for the car you can't afford —ask a credit union loan officer to prequalify you first for the loan amount and monthly payment you can afford.



• Do your homework and decide what kind of vehicle you want—and what you really need.



• Try to plan when you'll be purchasing a different vehicle. Waiting until your old vehicle breaks down can require a very quick decision.



• Ask the dealer or seller about the car's history and for maintenance records; get a vehicle history report.



• Take a test-drive. Check the windows and lights, windshield wipers, locks, power seats, radio, and the horn. Check the heat and air conditioning, as well as the brakes and cruise control to ensure they're working properly. Drive at a variety of speeds and pay attention to the ride—is it smooth?



• Have it inspected by a pro. There's a lot to look for and you'd have to be mechanically inclined or have some mechanical experience to know where things are and to catch any problems.