Friday, July 18, 1997
When a Foolmobile
Is No Longer Foolish Or When MasterCard Hits a 52-Week High
by
TMF Runkle
Last week, Barbara and I bought a new car. Well, it wasn't new; it was a year old. A new car would have been several thousand dollars more, and not given us that much of an advantage. We did not trade in my venerable Foolmobile (221,000 miles); instead we traded in her Caravan (120,000 miles). Barbara said she was not going through what the Foolmobile has done to me. This started me thinking.
The theory behind having a Foolmobile is you save on car payments. However, machines, like people, grow old and wear out. This past year, I've replaced the transmission, radiator, heater core, and windshield on the Foolmobile. All of these repairs sneaked up on me, and required the use of the MasterCard. Since they weren't in the budget, I wasn't able to pay the repairs off when the bill came in. This winter, I finally paid the MasterCard down to zero, and what happened? The Foolmobile radiator went, the heater core clogged up, and Barbara's Caravan blew its head gasket. The result was several thousand more on MasterCard. Did I mention the Foolmobile lost its brakes on me while I drove to work a couple weeks ago? That was another few hundred dollars and gray hairs (Pittsburgh is kind of hilly, not a good place to lose your brakes).
Obviously, this is not Foolish. Both cars were worn out. As I look out on my driveway this morning, I see a pool of goo, which is a mixture of antifreeze, transmission oil, and engine oil. All dripped from the Foolmobile. Its front tires are wearing unevenly, indicating some front-end trouble, too. Monday I have to take it in to get it inspected, and they will certainly find something else wrong. For all this money, and safety too, I need to buy a new car.
WE INTERRUPT THIS FRIBBLE TO MAKE AN IMPORTANT ANNOUNCEMENT
After I wrote the last paragraph, I decided there was no sense in continuing to own the Foolmobile. I had no more desire to put any more money into the thing. I drove down to my local auto dealer, and traded the thing in. I found a slightly used car that met my needs, and negotiated what I felt was a fair price. There are many ways to do this; I used a method that isn't possible for everybody. I called an old friend of mine in the Washington D.C. area, Elias the Car Salesman, and asked him how much I should get for the Foolmobile, and how much I should pay for the car I wanted.
Elias said I should take whatever they offered me for the Foolmobile; it was worth $300 maximum. He said he certainly wouldn't want the thing. He had enough car fluids dripped on his lot. He looked in the NADA Blue Book for the price of the car I wanted. Actually, purchasing a Blue Book can be done at your local bookstore; you don't need to bother Elias the Car Salesman for that. However, calling up a dear friend far away, who just happens to sell cars, gave me a better negotiating position. Elias even spoke to the salesman for me.
Using the price Elias quoted me, I agreed to a selling price, provided the salesman took me fishing that night. I bought the car, and caught a small mouth bass. I did pay a little more than the Blue Book price; you have to remember it's only a guide and the local market conditions determine what a car is worth. Since I bought a 4-wheel drive vehicle, it carries a higher premium here in Pittsburgh. That's why I insisted the salesman take me with him fishing as part of the deal; something had to compensate me for that premium price.
How does the Foolmobile feel about this? Does it sit dejected in the dealership lot, waiting for transportation to a gravel-lot-used-car dealership in West Virginia? It may be waiting transportation to the gravel lot, but it doesn't feel a thing. Cars have no feelings; they are simply machines. I wish I remembered that last year when I replaced the transmission. I got used to driving the thing, and lost sight of the fact it was finally worn out after a measly 220,000 miles or so. It may have been paid for, but it ran my MasterCard to new highs.
Finally, many sources suggest you don't trade in your car, that you sell it yourself instead. You're likely to get a higher price. I decided not to do this since title transfer is a hassle and the time required to sell it yourself is quite significant. Right now, at this stage of my life, the time is worth more than the money. Several years ago, it was the other way around. You need to make this decision for yourself.
For more information on buying a car, check out The Motley Fool: The Way To Buy A Car