By JOSH JACQUOT
Shopping for a brand new automotive has by no means been extra financially daunting. A 2025 evaluation from Edmunds discovered {that a} report 19.3% of customers who financed a brand new automobile within the second quarter of 2025 dedicated to a month-to-month fee of $1,000 or extra. That’s almost one in 5 consumers taking up what was as soon as thought of an excessive automotive fee — pushed by excessive rates of interest and rising automobile costs.
Whereas it may be tempting to stretch your finances for the automotive you need, locking your self right into a high-cost mortgage generally is a painful mistake. Earlier than you signal, listed below are 5 widespread car-buying missteps to keep away from.
Shopping for a automotive you may’t (or shouldn’t) actually afford
There’s a distinction between having the ability to purchase one thing and having the ability to afford it correctly. With a median new automobile transaction worth of roughly $49,000, many consumers are really stretching their budgets. It’s not unusual to see consumers go for prolonged 72-month or 84-month financing phrases.
That shiny SUV may appear inside attain due to versatile financing, however the long-term hit to your monetary well being might be appreciable. Shopping for inside your means — ideally focusing on a mortgage time period of not more than 60 months and maintaining your car-related bills beneath 15%-20% of your month-to-month take-home pay — is sensible procuring in an period of rising rates of interest and ever-increasing automotive costs.
Not procuring round for a mortgage
One of the expensive and customary errors automotive consumers make is ready till they’re sitting within the dealership finance workplace to consider a mortgage. Dealerships might provide comfort, however their financing might embrace marked-up rates of interest or hidden charges.
As a substitute, stroll into the dealership with a preapproved mortgage provide out of your financial institution, credit score union or a web based lender. In response to the Shopper Monetary Safety Bureau, this transfer can save consumers tons of to hundreds of {dollars} over the lifetime of the mortgage. Once you do that, the vendor can nonetheless attempt to beat the speed — and generally will. However now you’re negotiating from a place of power, not desperation.
Rolling detrimental fairness into a brand new automotive mortgage
If you happen to owe extra in your present automotive than it’s value — a state of affairs generally known as detrimental fairness — buying and selling it in for a brand new automobile generally is a monetary landmine. This generally occurs when individuals take out a six-year mortgage, commerce within the automobile after simply three or 4 years, and carry the earlier steadiness into the brand new automobile. Rolling that deficit into a brand new mortgage simply worsens the issue, guaranteeing that you simply’ll be underwater for even longer.
In response to Edmunds, 28.2% of trade-ins in July 2025 concerned detrimental fairness, and the typical quantity consumers owed above the automobile’s worth was $6,902. That units the stage for a vicious cycle, particularly if consumers commerce automobiles continuously or face surprising job loss or restore prices. If you happen to’re on this state of affairs, think about maintaining your automotive longer or making further funds. If you may get a greater price, even refinancing can get you again to breakeven.
Skipping the web gross sales departmentMost main dealerships now have devoted web gross sales groups that exist to promote you a automotive rapidly and infrequently at higher costs than you’ll get face-to-face. If you happen to already know what make, mannequin and trim you need, it can save you hours — and tons of and even hundreds of {dollars} — by working with the web gross sales division as an alternative of strolling onto the lot.
Websites equivalent to Edmunds may also help you evaluate pricing between a number of sellers, and plenty of will present you real-time stock, rebates and incentives. This allows you to store from the consolation of residence and make sellers compete for your online business. It additionally provides you a written quote you may carry with you — a robust device when negotiating.
Overlooking used alternate options
Shopping for new is tempting — it smells nice, it’s beneath guarantee, and nobody else has touched it. Nevertheless it’s not at all times the neatest monetary transfer. As we speak’s licensed pre-owned automobiles usually include prolonged manufacturing unit warranties, bear rigorous inspections, and price hundreds lower than their new counterparts. The fast depreciation of most new automobiles solely worsens the image. Most lose 20%–30% of their worth within the first yr alone, in accordance with Edmunds. Avoiding that depreciation hit can save hundreds.
Edmunds says
Shopping for a brand new automotive is likely one of the largest monetary choices most individuals make — second solely to buying a house. Avoiding these 5 widespread errors received’t simply prevent cash — it has the potential to assist guarantee your long-term monetary safety. Take your time and do your homework. The precise deal isn’t simply in regards to the automotive — it’s in regards to the life you wish to dwell after you drive it off the lot.
____
This story was offered to The Related Press by the automotive web site Edmunds. Josh Jacquot is a contributor at Edmunds.
