I’m Frugal, But I’m Still Buying a $50,000 Car

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Those who know me know I am a frugal shopper. When I do shop, I like to spend money on good food, experiences, and on items for my home. So now that my 2006 Honda is starting to show signs of ageing, I need to adjust my budget so that I can buy a new car when the time comes.

I budget for every major purchase

Budgets help me to plan for upcoming expenses and it allows me to develop the right spending habits. So now that I am planning for this new purchase, let me breakdown on what I am looking to buy.

I would like to get the Hyundai Kona Electric, which has an autonomy range of 400kms. Here’s a breakdown of its associated expenses:

  • The car costs $48,000, and there is a $13,000 Canadian Government rebate.
  • When I add in taxes (5% GST and 9.975% PST) the price of the car is $40,415.
  • The interest rate that I have been quoted is 3.80% and if I put no money down and pay this car over 5 years, the monthly payment will be $740.66.
  • The upped electricity bill from my new car’s weekly charge. 

Yes, I know that $48,000 is a lot of money for a car! But I calculated the gas-version of the car on a monthly basis and it would be $500 a month. When I include the cost of gas it comes to about $670 a month – less that $100 difference once all is said and done. Also, once the gas car is paid, I still have to pay $170 a month on gas.

On the other hand, the electric car will be $12 a month

This is maybe the most striking money-saver. If I charge this car once a week, the electricity bill would come out to about $12 more a month.

That’s over $150 cheaper than a month’s worth of gas.

How will buying a new car affect my budget?

For the past few years, I have been using the 20/50/20/10 saving rule, I find that it is the easiest way to create a budget. The method is that 20% goes to savings, 50% goes to essentials (ie: rent, transport, etc), 20% goes to debt and 10% goes to fun.

The Hyundai Kona Electric is a very popular car. In fact, there is a 10 month wait! This will allow me to save a 20% downpayment of $9,600.

I usually do not put downpayments on cars, but if I do indeed place $9600 on a car, my monthly payment will be reduced to $564.73.

The master plan to buy a new car

I don’t know 100% if I would like to use funds to put on a downpayment but since it takes 10 months to get this car. So, I will save for this and then decide when I get the car.

Better to save and have the funds than to not have it, right?

Saving for every outcome

I opened a new savings account at my bank so that I can be accountable automatically save the funds. In order to save enough, I will have to put away $960 each month.

I will need to adjust my spending, and plan to do so by reducing the amount of dinners, shopping and some entertainment. I’ll also increase my side hustle projects to help secure this downpayment!

Getting a loan to buy a new car

I’ve been looking around for a car loan and checked out a few banks, after doing some research I found that there are some flexible options

Amortization period

  • Royal Bank allows up to 7 years amortization which allows me to create an affordable payment amount.
  • CIBC bank allows up to 8 years amortization.
  • 7 or 8 years is quite long to be paying for a car, I am opting for the 5 year plan. 

Flexible payment options

Like a mortgage, I found out that I can pay for this car on a monthly, semi monthly, bi weekly or weekly basis. I also found that some banks allow for an open car loan, where you can pay off the loan early!

Trading in my current car

As mentioned, I have a 2006 Honda Civic coupe. I love this car, I am planning to trade this in when I buy the new car, I will probably get $500 for this. This will be added to the downpayment!

What’s next:

Preparing for the test drive

Now that I have decided on the car that I’d like, I will be doing a test drive this weekend to ensure that this is the car for me. In order to save time, I called ahead of booked an appointment so that I have the sales manager’s complete attention for the hour test drive meeting.

I also have a few questions so I will have them ready for the sales manager and then we will hit the road. I also will not just take the car around the dealership! You best believe I will be going on the highway, up a hill, and I will see how this car handles on city streets.  

Finalize the extras

Since I usually keep my cars for at least 10 years, I often buy an extended warranty. I’ll be checking to see how much this is at the dealership and will ensure that this warranty will cover the electric car battery for 8-10 years.

I know that some may find it fun to buy a new car! But since this is such a major purchase, I don’t want to get caught up in the excitement. I’ll continue to save for the downpayment, strategically adjust my budget and keep you posted on when I get the car. Stay tuned!

This is a guest post by Bev Wilks, personal finance blogger at Bacon & Heels

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1 Comment. Leave new

  • How have you calculated the magnified effects of EV depreciation in all of this?

    I know the first thought is ‘all cars depreciate’, but history is showing us all non-Tesla EVs depreciate at a much faster rate than their gas equivalents (Nissan Leaf vs Nissan Sentra as a good example). One shouldn’t be surprised in 5-years time seeing 5-year old Kona’s selling for the same price as 5-year old Tuscon’s that originally cost $20,000 less (actually, nearer $24,000 once you consider the interest paid on that extra $20,000).

    If over a 10-year span you lose $23,000 more due to depreciation, are you certain the savings in gasoline will offset?

    Also to consider is comparing how electricity prices have increased over the past 10-years and compare that to gasoline.


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