Financial Literacy: I’m frugal, but here’s how I’m planning to buy a $55,000 electric car
I’m frugal, but here’s how I’m planning to buy a $55,000 electric car
Contributed article by : Beverly Wilks – Financial Education Advocate and Blogger at Bacon & Heels
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. With the price of gas where it is, I am starting to consider about buying an electric car, and I need to adjust my budget so that I can buy a new car when the time comes.
I would like to get the Hyundai Ionic 5 (which has a 2 year waiting list) and has an autonomy range of 400km’s (248miles). Here’s a breakdown of the associated expenses:
The car costs $55,000, and there is a $12,000 Federal and Provincial Government rebate.
When I add in taxes (5% GST and 9.975% PST) the price of the car is $49,439.25.
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 over $900 a month. That is quite high, so I will add in my current car as a trade-in and will put down some money on the vehicle
Yes, I know that $49,000 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 $550 a month. When I include the cost of gas it comes to about $670 a month. 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 $100 cheaper than a (typical) 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 (i.e.: rent, transport, etc.), 20% goes to debt and 10% goes to fun.
The Hyundai Ionic5 is a very popular car. In fact, there is a 2 year wait! There is also the All-Electric Mini Countryman SE 3-door, there is also a wait for this car. But waiting will allow me to save a 20% downpayment of $9,800.
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 2 years to get this car, I will start to 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 and automatically save the funds. In order to save enough, I will have to put away $408 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
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!
Preparing for the test drive
Now that I have decided on the car that I’d like, I will be doing a test drive next week 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.
What do you think? With gas prices at an all -time high, is now the time for you to consider
To learn more about Beverly and Bacon & Heels, read the "Power 5" interview that we did with her in September 2021 - you can read the full blog post HERE.
Thank you for your contribution Beverly!
Contributed article by Beverly Wilks, tech marketing executive, financial literacy champion and blogger at Bacon & Heels.