Since I refer to my vehicle as Little Car a lot, I figure it was high time to officially introduce my car, a 2010 Toyota Yaris. Why is it worth its own post?
I know my mom will think it’s weird that this is one of the pieces of advice that stuck over a lifetime, but she always told me,
“If you can’t buy a car in cash, you can’t afford it.”
So that’s what I did, even though I was on the most entry-level of entry-level salaries at the time.
This all started when I graduated university. I (luckily) got a job right out of school, and I was all set to live the working-downtown dream, i.e. living within walking distance to work. I found a (wonderfully cheap) room in a two-bedroom apartment in a cute neighbourhood that put me 15 minutes away from the office on foot, and the rest is history. With the exception of some weak moments in the depths of the Ottawa winter, when I caved in and hopped on a bus, I walked to work for a solid year and a half.
Since I was so close to transit and to work, I lived pretty happily without a car. Even when a new job took me outside of walking distance, that apartment was still right on a bus route that got me to work quickly. I managed to live for a solid two years at that place, saving a ton by relying on public transportation.
Luckily, I was stashing away those savings, because life happened, and I fell for The Boyfriend, who is a committed suburbanite. Worse things have clearly happened, but after two years of my walkable apartment, I was gearing up to move to The Suburbs.
(Which, full disclosure, I absolutely adore. I am a total convert, and I lucked into the most walkable suburban neighbourhood ever. But that’s another story.)
Knowing what I did about the public transportation options available to me out in the burbs, a car was definitely in my future. There was only one problem: I knew literally nothing about buying a car. Oh, and there’s no way I could afford insurance, gas AND a car payment. Just wasn’t an option, so it looks like my mom’s advice about buying the car in cash would have to do.
So I did what I do in these kind of situations, and took to the internet with a list in hand, and a $10,000 budget in mind that would let me to make the purchase with cold, hard cash. I had my requirements:
- Ideally, I wanted a Toyota, since I drove my mom’s Corolla all through school and it was a tank. Not a single major problem, and it has since gone to a great home with my uncle. It’s a rust bucket now, but it just keeps swimming.
- I wanted something really fuel efficient, because I had gotten used to reasonable gas bills with the Corolla.
- I wanted a small car. All it really needed to fit was me, The Boyfriend and The Dog (who had yet to enter the scene, but let’s be real, I always knew we were going to end up with a dog.)
- I wanted as unfancy of a car as I could get while still having air conditioning. That was my only real “must have” extra.
- I wanted a used car, partially because of my budget and partially because I’ve heard all of the horror stories about how much new cars depreciate over the first few years.
Based on those factors, and some extensive comparison shopping between brands, the 2009-2011 Toyota Yarises (Yari?) were consistently hitting all of my criteria. I swear I looked at every used Toyota Yaris listing in the Ottawa area, so by the time I scheduled a test drive of the 2010 Toyota Yaris that would become Little Car, I knew it was a great fit for what I wanted.
The funniest part of the whole thing was how little I cared about the actual car itself. We showed up for the test drive, and thanks to my research, I knew this car had my single must-have of air-conditioning, and a slew of other nice-to-haves, including power windows and locks. The test drive was *almost* a formality, to make sure the car went from point A to point B. (It did, in case the suspense was too much.)
Why didn’t I care more about the particulars?
I knew, from my years of driving the Corolla, that after about a month or two, the car itself becomes entirely secondary – to me, at least. It’s easy to get worked up about the interior of the car, or small features, or upgrades, but at the end of the day, you’re going to experience hedonic adaptation. Those amazing upgrades you paid possibly thousands more for? They’re going to seem totally mundane. I knew enough to expect this, so buying a totally mundane experience to start out with just made sense.
After all was said and done with the test drive, I ended up paying $2000 more than I had budgeted, due in part to my nervousness about first time car ownership (hi, extended warranty!) and not including taxes in my targeted price.
Pro tip: taxes are a huge chunk of a car purchase. Since I had never bought anything that cost more than a few hundred dollars, this came as an unexpected surprise I should have seen coming. I really, really should have seen it coming.
I went over budget, but luckily, not so over budget that the purchase couldn’t be paid for in cash. And the benefits of that have been absolutely huge.
I have ~$300 extra room in my budget every month.
Not having a car payment has been a lifesaver multiple times. I’ve been able to keep saving towards goals that are a lot more important to me than having an impressive, shiny new car, and when unexpected expenses come up (ahem, vet bills) I can take them in stride because my budget isn’t stressed out about losing the car.
I paid exactly 0% interest.
The people who argue that I should have kept all my savings invested to earn interest of their own have a really valid point – I could probably have earned more in interest on that money than I would have paid over the course of a car loan. That said, I didn’t pay a cent more than the purchase price of my car to acquire it, and it’s a good thing too, because it’s definitely a $12,000 car – not a $15,000 car, or whatever it would have ended up being with interest.
I was able to swing the gas and insurance in my budget easily.
Even when I had the dual expense of a monthly transit pass and my car expenses, having a fairly hefty newly-insured premium to pay every month was never a big struggle. There’s a big difference between paying about $210 all in to have a car every month, and the $500+ it would have totalled with a car payment in there.
I could get a dog.
A car was always a prerequisite for getting a dog in my mind. Without a car, I wouldn’t have been prepared to get The Dog to the vet in an emergency situation, and I would have had a much harder time taking him on adventures with me, since public transportation here in Ottawa is the opposite of pet-friendly. Plus, the car came with my move to a place the suburbs, which in its own right, included a yard. Looks like it’s time for a dog!
I’m not fussy about Little Car in the same way I would be if she was Fancy Car.
If I had bought a new car – new new, not just new to me – I would probably be a lot more worried about it than I am about Little Car. Little Car, while fantastic in her own right, is not a head-turner by any means. She’s got a few tiny scratches, one or two holes in the upholstery, and a back seat that has been absolutely carpeted in The Dog’s hair by now. Don’t get me wrong, I clean Little Car thoroughly twice a year, and keep up with all of my routine maintenance, because Little Car has a good ten years left in her if I do my part. But I don’t spend any more time or mental energy on her than I need to.
I know there’s a lot that has been said and will continue to be said about financing a car in the personal finance blog community – what do you think? Have you been happy with your decision either way? (Because that’s what counts in the end!)