The Prosperity Economics Car Buying Strategy Tested: A Case Study

Remember when we wrote about Prosperity Economics tips for buying a new car? Well, one of our incredible clients put that knowledge to the test and kindly shared the results with us. So we’re going to look at what he did, and what you can learn from this car buying strategy. 

Art’s Car Buying Strategy

When Art wrote to us about his car buying strategy, we were more than happy to help. He started with a 2007 vehicle that had over 260k miles. It wasn’t proving very reliable anymore and was needing consistent (and costly) work to keep it running smoothly. It was pretty clear that the time for new, or at least new to the family, was upon him. 

He came to us with two questions:

  1. How should he handle the down payment?
  2. What kind of repayment terms should he seek?

These questions inspired us to write the car financing post you saw last month so that Art and anyone with similar questions could get help. 

Fortunately, the results were a success! Art wrote us back to share how he secured his new-to-him car, and we’re thrilled. Check out the photo he sent us of his wife with their new car!

Art's new car, best car buying strategy

Art’s New Car

Art started the whole process by seeking a pre-approval with CarMax so that he knew his exact price range while car shopping. Going through the pre-approval is such an important step, because then no matter where you purchase your car, you know what you can afford. Then, he took that pre-approval and started his research across the various car-buying platforms.

Initially, he thought he might be looking at a car 2-3 years old, yet he was actually able to finance a 2022 car. He bought a Buick Encore with 37k miles for about $24,000, which is great for an almost-new car. And because he didn’t buy a brand-new car, he didn’t have to worry about the (immediate) depreciation of the asset.

You’ll remember that one of his big questions was how he should go about the down payment. His two options were to take it from his emergency fund or to pull it from his 401k. He decided to pull $3,500 from his 401k, so that his emergency fund can continue to grow and be available for his family for other purposes. We love this, because it gives his 401k dollars a better purpose, and he won’t have to play catch-up by replenishing that emergency fund.

To finance the car, Art opted for a long loan term of 72 months, which puts him at a monthly payment of $416. We love a long-term loan for fixed payments like this because it allows you more flexibility from month to month, including the ability to save more. In times of high inflation, long-term loans are especially nice, because the payments will feel less and less to you over time. And, Art always has the option of paying off the loan sooner, if he wishes. 

Next up for Art is to either sell or donate his old vehicle so that he can remove it from the insurance policy. 

The Outcome

Here’s the amazing thing about what Art and his wife have done with their new car purchase:

  • They’ve got an almost brand-new car without the brand-new price tag
  • Their monthly payments are low enough to provide some flexibility for them
  • If they want, they can sell the old car and put those funds toward their car loan, or even in their emergency fund
  • They’ve given their 401k a purpose now while allowing their liquid emergency fund to keep doing what it’s doing
  • Reduced the likelihood of unexpected repairs and maintenance that their old car needed
  • Created safety and peace of mind so that they can drive their car confidently

The Best Car-Buying Strategy

We’re so grateful to Art for sharing his car buying strategy with us because it helps others create a frame of reference for the tips we’ve shared. Now, hopefully, you can see how this car buying strategy might play out in your own life. 

Of course, the details are going to look different depending on how much you can afford and what kind of car you desire. Yet the principles remain the same. You want to put yourself in the most abundant position possible, which you can do by keeping your payments low and your emergency fund intact. 

At the end of the process, Art shared this sentiment: “I feel like this is one of the smartest financial decisions we’ve made in a few years and you guys were a big part of it.” We’re grateful that we get to be a part of these success stories and empower people to make financial choices that they are THRILLED with. We offered some support, yet Art and his wife did the real work. And now, by sharing their success with you, hopefully, we can create exponential wins!

If we can help you think through your finances and make decisions with more confidence, we’re more than happy to assist. You’re always welcome to book time with us or to email your questions to we*****@pr****************.com. We look forward to working with you.

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