I almost feel like I need a quick disclaimer on why someone who is frugal would a) finance a car and b) buy a luxury car like a Lexus. Here’s the story.
Twenty-three months ago I was driving a Volvo XC90 and with was a huge POS. I purchased it from a friend for $8,000 and soon realized there were a plethora of things wrong with it–most notably, the odometer didn’t even work so I didn’t even know how many miles it had! Plus, every time something broke down on it (and this was often) it cost at least $2,000 to repair.
So 22 months ago, my husband and I had our eye on a Toyota 4Runner at a Lexus dealership. I will admit, I had always wanted a Lexus and sort planned this out to look at the used Toyota at the Lexus dealer. We drove the 4Runner and hated it. The car salesman suggested we try a Lexus RX350. We did, and the rest was history.
And as to why? The Lexus was actually $10,000 less than the 4Runner. It is a 2010 and had 70k miles, but, come-on, it’s a Japanese car that will run virtually for 300,000 miles. Because of the high miles and with my trade-in for the POS, I financed $20,000 with a car payment of $405.80. If I would have paid the minimum for the 60 mos. the total would have been $24,348. Overall, the Lexus is a safe, excellent quality car that will last me many more years.
Emotionally, I justified the purchase as a 40 year birthday present to myself and I had just passed a major accreditation in my field of work…time to celebrate. I financed the car because I didn’t want to wipe out my savings account to buy it and I was worried the Volvo would break down and keep costing me money in repairs. I also knew I would pay it off quickly.
How I did it?
1. Paid more than the minimum payment–always.
2. Paid toward the principal balance (although Lexus Financial doesn’t make this easy…I had to mail the payment in)
3. Every penny of my side-hustle went toward paying extra to the car loan
4. Made this part of my debt snowball and got after it. This is done by paying the minimum to other debt then taking as much as possible from my budget to pay extra.
5. Enjoyed watching the balance dwindle.
I’m so happy to have purchased this car. It will last me for years to come. Getting it paid off early and being able to move on to the next debt (my credit card) is one more step closer to becoming debt free, financially independent and retiring early.