Considering the average cost of a new car, which is now approaching $50,000, it's crucial to recognize that buying a car is a significant financial commitment for most individuals. In fact, after a home or a college education, a car is one of the most substantial purchases we're likely to make.
But unlike a home or an education, a car is an asset that always loses value. So the question when buying a car is not whether or not you'll lose money – it's how much you'll lose.
Some people need a pickup truck for their jobs, and some families need a car with three rows because they have several kids. But once we're past the type of vehicle you need, many options affect the total cost – new versus used, brand A versus brand B, thrifty versus luxury. There are so many choices out there that it can be hard to pick the best one. And since cars are a personal choice, there's no authority out there that can tell you precisely what to do.
A Contrarian Approach
This week, we're advocating for a deliberate, slow approach to car buying. This method allows you to bypass the stress and confusion often associated with negotiating a car purchase. By making decisions at a comfortable pace, you're more likely to choose a car that aligns with your values and financial priorities, reducing the risk of post-purchase regret.
The slow approach is the opposite of what most car dealers would prefer. Their job is to sell you a car. Now. Of course, there's nothing wrong with that, and not all salespeople make high-pressure sales pitches. But if there's one decision that shouldn't be made impulsively, it's spending tens of thousands of dollars for a car (plus sales taxes, fees, excise taxes, and insurance, to name a few inevitable expenses).
The big idea behind slow car buying is that you probably don't need a car today. Your vehicle may be older than you'd like, or your lease may expire soon, but unless a tree just fell on your vehicle, there's likely no rush. And when you're not in a hurry, when you can take the time to research all of your options – from financing to test-driving – you gain complete control of the process.
So, if you don't need a car right now, you have plenty of time to make a plan before you visit a dealer. You'll want to understand all of the car choices you have and what the total cost of ownership is likely to be. Next, if you need to finance your purchase, you'll want to explore financing options. Many dealers offer competitive financing options, but it's best to know what rates you'll get from your bank or credit union as well.
And when you finally start to visit dealers and test drive cars, the slow approach means that you'll know in advance that 1) you won't be buying a car that day and 2) you'll explore multiple car and dealer options before making a final decision. Once you choose a car, you'll also have a plan to avoid unplanned expenses and add-ons that can make a seemingly good deal less attractive.
Let's get started!
