Buying a minivan seems like anything but frugal ‘“ they are almost the epitome of indulgent, gas-guzzling vehicles that squeeze cyclists out of the car lanes and are the bullies of the road.

They are also, unfortunately, highly desireable when you have 3 kids. We discovered that although our Corolla has 3 latch positions across its back seat, you can’t actually fit 3 car seats in there at the same time (well, you can, but not in any kind of legally secure manner).

So we went minivan shopping and I’m going to tell you a little about the angst of a frugal-minded family that is undertaking such a purchase. I admit to big purchase anxiety ‘“ that fear of blowing all my hard-earned and hard-saved money in a regrettable orgy of consumption. Big purchases are intimidating especially when your disposable income is limited and you know that mistakes made will be felt for years to come. So I’m driven to research, review and procrastinate on the purchase, out of fear of making a mistake. That fear, of course, can overcome sensible thinking if you let it get out of control. I want to tell you some of the steps I took to plan and execute my purchase, in the hopes that the process will come in handy to anyone facing the same anxiety with Big Ticket Items.

1. Assess your needs

I’ve always believed that your standard of living is affected by just a few basic things ‘“ where you live, what you drive, how many kids you have and what career you choose. Minivans are a consequence of the kids, but they are a fiscal weight in their own right.

As large cars, they carry large price tags. The traditional mid-life motorcycle or convertible crisis would have been cheaper to purchase. Our Corolla is infinitely cheaper to operate.

Strictly speaking, we don’t need a minivan. No one really needs a car. I’ve made life choices that minimize my car needs and have survived fairly well without one. However, it’s very, very desirable with small kids in tow. We have spent a year trying to work around having a car that fits all 3 kids, and it’s exhausting and limiting in palpably unpleasant ways. This purchase, therefore, has to fit alongside my essential needs ‘“ but it can’t threaten basic things like food and shelter. That inherently sets a budget in two ways:

  • the monthly cost must be sustainable within our incomes and not consume every last penny of disposable income or savings.
  • the total cost must be taken care of before I have to start seriously allocating money for retirement and for the kids’ educations. I figured 5 years to pay it off was a good time frame.

We borrowed money for this car. I would have preferred not to, but it’s such a large purchase that it would have taken years to save us enough money to buy outright. Since we are really facing a car-seat issue, it seemed useless to save for 5 years to purchase something that we could potentially not need much thereafter. Once the kids are all in booster seats, a normal car becomes possible again.

2. Assess your priorities

We wanted a reliable vehicle. To me, that is the ultimate luxury. Everything else comes second. I tried to keep that in mind as I sighed over moonroofs and leather seats, and weighed our options over newer and older vehicles. Reliable. This car is to help us manage our kids, not create more problems. We narrowed it down to two of the most reliable models and then started looking.

3. What makes a good deal?

With reliability in mind, we wanted a vehicle that would be relatively trouble-free over at least the next 5 years that we expect to own it. We limited our search to 2003 models or newer and with under 100,000 kilometers. Our own usage is quite low ‘“ about 15,000 kms a year, so we could get one with more mileage for cheaper and then still be under the expected 200,000 trouble-free kilometres for these models within our usage period.

Stains and cigarette burns? Bring it on. Ugly colour? I just closed my eyes. Rust spots? Ok, we shouldn’t be seeing rust spots in a 5 year old car. Toronto is cold and they use a lot of salt on the roads, so rust is a big issue up here. Many otherwise useable cars are trashed because they are rusted away, so we skipped over anything showing vulnerability to rust. But other than that – ugly was easy on the budget.

We test drove old and new models to see how they compared (answer ‘“ all pretty much like minivans). We got lists of their features and figured out if any were necessary (answer ‘“ safety stuff was important, but they all had that in the base models because hey, they’re minivans).

We did discover that tinted windows kept out heat from the car on hot days, which is a definite bonus with kids, and we discovered we liked the power door feature that opens automatically and limits the time that the kids play in traffic while we load the car. We also realized leather seats were sticky in warm weather and cold in cold weather, and that moonroofs create an annoying amount of glare. It was nice to be able to put those mythical luxury features aside. We did our test drives with a firm sense that we weren’t purchasing anything on the spot. We knew we weren’t going to buy anything until we knew what we wanted.

This is the most important part of a good deal. It has to be a good deal for us, and that means knowing what we wanted and didn’t want. We began with a price range and model type, and from there everything was just relatively nicer or not. That helped limit our choices and make comparing easier.

4. How to compare apples and oranges.

The comparison part is where it gets interesting. How do you compare a base-model 2003 and 120,000 kms for $10,000, with a mid-option 2008 model with 30,000 kms for $22,000? Especially if one is a horrible blue and the other has a funny smell?

You will end up doing the same math that the dealers do when they price the cars. (Please note that this may vary in your area. Do some research to find out how cars last in your climate and driving environment so you can make your own accurate numbers.) A new reliable car will last about 10-12 years without much trouble in Toronto. They can last longer, but with increasing repair costs, and exactly how long is a bit of a question mark. Good cars depreciate quite slowly, but you can take the total cost and divide by the number of useable years to get an annual cost. So, if a new model minivan is $35000 and you expect it to last 10 years, it’s worth $3500 less every year. Don’t forget to figure in taxes and financing, as well as possible sales incentives. I worked out a final price for everything we looked at, as well as a monthly price since financing was an issue with some new cars. Make sure you’ve got those final numbers worked out first so they don’t confuse you later on.

Once you’ve got the total new cost divided up into an annual cost, you next look at the mileage to make that number more exact. If it’s been driven 20,000 kms per year of ownership, then you’re on track to the engine lasting 10 years or 200,000 kms without issue, and the depreciation is standard. If it’s been hard used and someone has racked up 100,000 kms on a 2 year old car, it’s had half of its trouble-free engine life used up. Unless you don’t drive much yourself, you don’t want to pay more than half the initial cost of the car, no matter how old the vehicle is. Especially, you should be suspicious that you’re looking at a rental or corporate vehicle that has been driven by several people ‘“ this also increases wear and tear on the engine since people drive differently and someone along the way is bound to not have treated the car well. By the way, when the used car dealers say your car has had one owner, that could mean a single rental agency or corporation. Don’t bother buying anything that’s been in an accident unless you have a very good mechanic who will put it on a lift and examine the damage. We’ve seen cars pieced together from two separate cars, and you wouldn’t know it unless you lifted it up and looked at it. If your mechanic doesn’t use the lift, they’re not really helping you.

To make a good purchase, you don’t want to be on the wrong side of depreciation. We looked at a 5 year old model with 100,000 kilometers on it, but the dealer wanted more than half the original price for it. We saw a lovely 2008 model with many luxe features and very few kilometres on it, but it cost as much as a brand new base model that we could have bought instead. It didn’t make sense, based on our identified needs, to spend more money for features we didn’t need and give up a year of reliable use for that. We also saw an interesting 2003 model with very few kilometres on the engine and we debated that one for a while, but in the end this was a better deal for someone who drove a lot and would put a lot of mileage of their own on the car. For us, it really meant we’d be acquiring a car that would rust away before the engine gave out, with no net gain on our part.

You can also personalize the expected lifespan of a car depending on its condition. If you see a ten year old car with 70,000 kilometres on it that hasn’t got a speck of rust on it, it’s obviously going to get a longer than expected life span. I’d guess how long in terms of years and engine-life and make my offer accordingly.

5. Making offers

The good old days of haggling over cars is disappearing. Ok, they were actually the bad old days that were a huge waste of everyone’s time, so maybe it’s for the best. For some reason, though, I actually enjoyed haggling a bit over the pricing.

We separated the test drives from making a purchase for a reason. Once we’d decided what we wanted and on what payment scale, I’d call back and ask for their best price over the phone. For example, we’d considered a new car if we could get good financing or $2500 or so off the sticker price. I phoned every dealership in the city and asked for their best price. The response was always to make an appointment for a test drive and come to meet them. I replied that no, I’d already done my research and if I came in to do anything it would be to sign ownership papers so, please, make me an offer over the phone. This seemed to work especially well later in the evening, I don’t know why, and within the first couple of calls someone broke and offered me $1500 off the MSRP. Once you’ve got one offer, you can use that as leverage to ask for more. We also learned, however, that financing is usually arranged through the larger corporate entity and wasn’t negotiable. We had to focus on reducing the sticker price instead.

For used cars, it’s a little different because you have to go see the merchandise to assess the condition. We dutifully examined and inquired, and then said we had an appointment to see the next set of cars (I carried my binder thick with printouts of sales sheets and ads) and we’d ask the sales person like to give us his best price on one of the vehicles we’d seen before we left. As I’d expected, this usually resulted in some vague offer to ‘˜do something’ about the price, which was fine with me. We really did have a lot of cars to look at and if we picked a favourite, it was easy enough to call back and say we liked the car but not at quite the price it had been listed at. It also brought a fair amount of pressure to purchase right away, which was difficult to resist. We also found that used dealers had different pricing strategies. In one case we arrived at the lot and found that the online price was thousands less than the windshield stickers. The salesperson said that the ‘˜sale price’ was online. Obviously, this makes me think that the online price is highly negotiable too. Other dealers listed one price on the lot and online, which attracts more customers, and you can’t haggle with them as much since there are more buyers available to keep the selling price pretty close to asking.

We’d often arrive to look at cars that had already been sold. We quickly learned that dealers don’t update their web listings in order to keep attractive inventory on their sites to bring in more buyers. Also, the dealers purchased new cars at auctions held on Tuesdays and Wednesdays and often sold them on the weekend. We adjusted our search schedule to Thursdays and Fridays as a result, and made sure to call about a car we liked before going there to make sure it was there. We still felt like we were running behind the pack, though, and it was hard to keep calm.

I did go as far as putting a deposit to hold a car while we thought about it since it was a fairly good deal. I made sure it was clearly marked that any final sale was pending my final decision and would be fully refunded. I don’t know if I’d do that again. I squirmed as I did it, partly because I know the psychological game being played of commitment. Once you’ve partly committed to a choice, especially in the middle of a tiring search process, you’re more likely to rationalize that choice as being the right one for you even if that’s not true. Psychologists call it the ‘˜foot in the door’ phenomenon, but it felt more like ‘˜decision by exhaustion.’ Looking back, I’d avoid doing that. If you know in your gut it’s not quite the right thing for you, just walk away. The worst case is that you’re wrong and you’ll have to wait a bit longer for the next right choice to come along, and that time you’ll act more decisively.

6. The end

In the end, we bought a 2009 model that had been owned by a rental company for 6 months. That’s a relatively short time for any potential damage to have been done by various drivers and, let’s face it, people renting minivans are probably not hot-rodding around town. It had moderate amount of mileage for the time frame, but was $6000 less than a completely new model, so we’re on the right side of the depreciation spectrum. It’s even still covered by the factory warranty and we should get a full 10 years of service for it, but can also sell it at a reasonable resale if we can reduce ourselves into a smaller vehicle in a few years. The total cost was more than I’d like to commit to any single possession short of a house. I’m hoping that’s just lingering anxiety and not a genuine lapse in financial planning.

It helped us bargain, I think, that I said we’d made a deposit on a car at their main competition down the road. It also helped that we’d arranged our own financing and could purchase on the spot. But it was listed at a very reasonable price and we both knew it, so I only got $500 taken off the price tag. I could probably have gotten more on a car that expensive. Retrospectively, I’d ask for closer to $1000 but I do think fatigue was getting to me.

We are happy with us thus far, I will try to update in a year about how it’s going. And the kids like the candy red colour.