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How I Saved to Buy a (Lightly) Used Car

June 8, 2018
Personal Finance
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How I Saved for a (New) Used Car

Christine Hennessey is almost finished paying off the 2014 Nissan Sentra she bought used in 2017. (Photo courtesy of Christine Hennessey)

Unless you’re Elon Musk, buying a car is a pretty big deal.

With the average price of a new car now topping $30,000, most of us can’t afford to pull up to a dealership in a beater and drive away in a flashy new ride without putting a lot of thought (and precious savings) into the purchase.

That’s why NerdWallet decided to look at how everyday people, perhaps juggling debt and limited funds, approach car-buying.

Christine Hennessey, a 35-year-old content and social media specialist in Wilmington, North Carolina, shared her experience buying a used car last year on her blog, which focuses on living frugally. We asked Hennessey how she and her husband saved up for the 2014 Nissan Sentra on a tight budget, what she learned from the process, and how she navigated the “awkward” price negotiations.

This transcript has been lightly edited for clarity and length.

» SKIP AHEAD: NerdWallet’s tips for buying a used car

Tell us about yourself and your financial situation

I’ve switched careers many times. I’ve been in marketing for the past few years, and I think that’s where I’ll stay. I have a library science degree and an MFA in creative writing, and I’ve freelanced before. I started a new job last September at a company that is growing very quickly, so my career is on a good track.

I’m comfortable, but I do worry about the future. I have a lot of student loan debt from undergrad and my two master’s degrees. I’m definitely not a big spender. I’ve always enjoyed DIY projects and finding good deals.

My husband and I rent, but homeownership is our long-term goal within the next three to five years. We have a giant dog and a bunch of chickens in our backyard. Travel is another financial goal, as I haven’t traveled much since graduating from college.

» MORE: What is the total cost of owning a car?

Why did you decide to buy a car?

My other car was a 2005 Ford Escape, which we had bought from my husband’s parents 13 years ago. We drove it throughout our 20s and it was our only car for a long time. We didn’t take the best care of it and could tell it was on its way out. We knew we had to replace it.

A year or two ago, we started putting money away for a future car and really wanted to buy it in cash. We got our yearly inspection, and the Escape failed terribly. It would cost between $1,500 and $2,000 for repairs to pass the inspection, so we just decided to trade it in.

What were you looking for in a car?

We knew we wanted something small, like a sedan or hatchback, that had really good mileage and was really reliable. We wanted something 2012 or earlier and wanted a white car because we live in North Carolina and it gets hot. There are so many white cars here.

Why did you opt for a used car vs. new?

We went with used strictly for budget reasons. Buying new wasn’t a priority for me. People tend to trade cars in all the time. The one we bought only had 25,000 miles on it. I plan to drive this car until it no longer drives.

» MORE: Compare the costs: Buying a new car vs. used

How much did you spend on the car?

The total cost of the car was $13,125, including title, tags and registration. We paid a down payment of $7,000 in cash and traded in our old Escape for $1,500. The total three-year car loan was $4,625, which comes out to around $130 a month, but I’ve been paying more because I want to pay it off by the end of the year. We have about $3,000 left to pay off.

How did you save for it?

We bought the car in 2017 and started saving a year and a half earlier. My husband and I have a joint account for everything and we talk about money all the time. I made a new category in You Need a Budget for a new car and started putting in any extra money into it. When our old car started making funny noises and screeching, we started saving more and more. I had a couple of different saving categories and an emergency fund in addition to my car fund. I only had $5K in my car fund when my other car died, so I pulled from other categories.

What did you learn from the car-buying process? Would you do anything differently?

We only test drove two cars. I might have spent more time test driving a few, but we were on a time crunch since my old one didn’t pass the inspection.

I felt bad at the part where you’re supposed to negotiate. It was definitely awkward. It was helpful to have my husband there, even though he knows nothing about cars. Going in as a team helped. My husband jumped in. They wanted to give us $1,000 for the Escape and he asked for $1,500.

We had an offer from USAA for a loan and the dealer managed to get us a loan that had a better interest rate. That was part of the negotiation. I didn’t realize they could get you a better loan on the spot.

NerdWallet’s tips for buying a used car

If you’re looking to buy a used car, follow these tips to make sure you’re getting a good deal.

Look online. Scour sites like Craigslist, AutoTrader, AutoList and CarMax to compare prices. If you would prefer to see (and touch) the cars you’re considering, there are plenty of used car lots you can check out.

Understand the car’s history. Use the vehicle identification number to do a vehicle history report to see if it’s been in any accidents and how many times it has been sold. If it’s been in a serious accident or has gone through several owners, you may have more bargaining power.

Inspect it. Even if your test drive went well or if the dealer or seller says it’s been inspected before, you should still take the car to a mechanic to learn more about its condition. If the mechanic finds a problem, you can potentially use that information to negotiate on price.

Brush up on your negotiating skills. Research the car’s value, identify any concerns you have about the car’s condition and be patient about going back and forth in price negotiations with the dealer or seller.

Owning a car can be pricey. Sign up with NerdWallet to find out what your car is worth and see how we can help you save on car expenses.

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