How to Make Money Buying a Car

I mentioned in a previous post that I was thinking of buying an electric vehicle (EV). I actually did end up buying an EV. I did something that many FI communities (MMM I’m looking at you) abhor, I bought a brand new car (and I got a loan on it), which of course MMM did later.

Why I did it

Now, I should probably clarify a few things. I didn’t do this spur of the moment, I didn’t buy the most expensive thing we could afford, and I had the money to pay cash. The amusing part (to me anyway) is I bought this car 3 days after we closed on our house. We got our keys the house on a Friday and on Monday I had a new car to go with the house.

Let’s talk about why I did this, transportation costs:

Fuel Costs

  • January – $386.69
  • February – $364.46
  • March – $534.50
  • April – $521.52
  • May – $573.26
  • June – $668.46

Along with fuel costs I also had put in a new clutch on my old car. That was the first clutch I had replaced. My issue with the clutch of course occurred on my cross country trip back to California from DC. I noticed it as I pulled off the interstate in Missouri and basically drove from Missouri to California shifting without the clutch (only using it to get into first gear). While I had to put some money into the car for that replacement there were definitely other expenses that were going to be coming up for the car (new shocks and struts, new brakes and rotors, spark plugs, getting close to timing belt number 2, periodic oil changes).

And finally I also had to pay for parking near my work ($100 a month).

As I said I didn’t buy the most expensive EV available. A Tesla would have been cool, but much more than I was willing to pay, we also looked at the BMW i3, Chevy Bolt, Honda Clarity, and the Nissan LEAF. Eventually I settled on the LEAF for two main reasons: cost and range.

While we ended up financing the car the only reason I did so was because they required me to finance the car through them to get the purchase price I wanted and the interest rate is 0%.

I did trade in my old vehicle and while I may have gotten a better deal private party, I don’t think it was an unreasonable offer based on the mileage and cosmetic issues (dent in the side door from the vice in my garage that fell on it). For reference I ended up getting $4,000 for it. That car had long since been paid off and I basically traded they keys on that one for the keys on the new one. I drove away from the dealership without writing a checking or handing anything over except my old car, which was a really weird feeling.

What has the new EV cost so far?

My total purchase price was $31,895 with a trade-in of $4,000 resulting in a loan of $27,895. They offered me the option of 60 months or 72 months for the loan. Typically I would want to pay things off faster, but since they’re giving me free money I opted for the 72 months which leaves me with a monthly payment $387.43. A couple years down the road I will reexamine the cost of the loan vs. requirement for full coverage insurance and may lump sum pay off the note and drop the full coverage.

To date I have made 4 payments on the car totaling $1,549.72. I also bought an app called Leaf Spy Pro, that gives me some data logging features, access to some setting not available via the default controls, and the ability to monitor battery performance and health. The app was $15 and the OBD-II adapter was $35. My grand total so far is $1,599.72.

Since buying the car I have received the following:

  • Pacific Gas & Electric Rebate – $500
  • Monterey Bay Air Resources District Rebate – $1,500
  • Sate of California Rebate – $2,500
  • Free parking at in San Jose – $100 x 5 months = $500

I also expect to claim the full EV tax credit for $7,500 when we do our taxes.

Total rebates and tax credits: $5,000 ($12,500 with the EV tax credit) + $100 per month as long as I continue to work in San Jose.

Without even taking into account operating costs I am currently up $3,400.28 by switching cars.

Since buying the LEAF we have tried to use it as much as possible to save on maintenance on other gasoline powered car as well as saving on fuel costs. We have driven almost 10,000 miles on LEAF which on my old card would have meant almost 3 oil changes (at about $70 a piece, that’s another $210).

The point at which I will paid anything on the car (after taking into accounts all the rebates and incentives) will be month 42 when I have paid $16,272.06 in payments and will have received $16,200 ($12,000 + $100 x42). I’ll still have $11,622.94 left to pay, but will have saved an estimated $8,104.22 in fuel costs and $3,500 in maintenance costs (which is probably on the low end based on some of the upcoming repairs that were needed).

When I logged into to Personal Capital today to look at my annual expenses this what I saw when I looked at my fuel costs. I feel this helps confirm I made a good decision. Obviously I could reduce costs even more, but I don’t plan on biking to work (my commute isn’t really feasible for that and we have chosen not to live in San Jose).

Fuel Costs Drop Significantly with EV purchase

2 comments on “How to Make Money Buying a Car

  1. Stephen @ The FIRE Lane

    In Texas, we don’t get anywhere near the extra rebates you get. But my volt still qualified for the federal tax credit. Way to use available tax credits to your advantage! Although I personally need more range, I think there are many that the Leaf is perfect for.

    1. Kit

      We live in area with a plethora of chargers and we still have a regular ICE car as well for those longer trips. A lot of people suggested the Volt to us, but since we were keeping an ICE car we decided to go full electric for our second vehicle.

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