Mistake #1: Not Considering Your Budget and Savings Plan

Buying a car today, whether new or used, is a major financial commitment that takes planning.

In 2026, Kelley Blue Book reported an average listing price of $49,307 for a new vehicle and $26,918 for a used vehicle. Those market averages do not tell you what you personally can afford, but they show how quickly a purchase can strain a household budget.

Consider how much you can comfortably spend before choosing a model. Don’t let your desire for a higher-priced car send the rest of your budget into a tailspin.

Start with two questions:

• Have you saved—or do you have a realistic plan to save—for the down payment?
• What monthly payment can you afford after accounting for insurance, fuel, maintenance, repairs, and your other goals?

The Beelinger Budget App can help you see where your income is going before you add a car payment.

Mistake #2: Overspending on a Car at the Expense of Other Goals

Good money management starts with prioritizing your goals. Where does a car fit into yours? Will buying the vehicle you have your heart set on keep you from saving for another, potentially more important goal?

It’s a balancing act. A car generally loses value over time, but it can also feel like part of our identity. That emotional attachment can lead us to spend more on a vehicle instead of putting the money toward emergency savings, debt repayment, housing, retirement, or another priority.

Consider what type of car can meet your transportation needs and still reflect your preferences without putting you in a financial bind.

One widely repeated lesson from automotive research is that even many high-income households drive mainstream brands such as Honda, Ford, and Toyota.

Mistake #3: Not Doing Your Financing Homework

Know your financing options before you talk to a dealer. Comparison shop with banks, finance companies, and credit unions. Ask about annual percentage rates, loan terms, finance charges, required down payments, and prepayment rules.

Explore how a larger down payment or shorter loan term might reduce interest costs. A longer loan can produce a lower monthly payment while making the vehicle considerably more expensive overall.

Use a Car Loan Calculator Before You Shop

The Beelinger Car Loan Calculator can help you compare payment scenarios and estimate the total purchase cost after interest.

Get the numbers before you shop so you know what you can realistically afford.

With this information in hand, explore dealer financing. Some dealerships may offer special rates on certain vehicles, but you cannot judge the deal if you have not researched other lenders.

Mistake #4: Focusing Only on the Monthly Payment

Pay attention. This is an important one.

Let’s say you’re at the dealership negotiating and someone asks, “What can you afford to pay each month?” Stop right there. You want to negotiate based on the total cost of the car.

The monthly payment matters, but focusing on it alone can distract you from the vehicle price, loan term, APR, add-ons, taxes, and fees. You may reach the monthly number you want but pay substantially more over time.

Ask for the written out-the-door price, including dealer charges, taxes, registration, and other required fees, before discussing financing.

The original invoice or dealer cost can be useful research, but modern pricing can include incentives, regional adjustments, and other factors that make dealer cost difficult to determine precisely. The more practical goal is to compare written out-the-door prices from several sellers.

Remember that taxes, title charges, and registration fees affect the total. Paying them upfront can reduce the amount financed, but only do so if it does not drain your emergency savings.

Mistake #5: Not Considering a Used Car

We all like the look and smell of a new car, but a new vehicle can lose a meaningful share of its value during the first year. Buying used may get you more vehicle for the money while allowing someone else to absorb the steepest early depreciation.

My best car purchase was a three-year-old 2008 Infiniti G35 with 29,000 miles. I drove that car for seven years and never had major problems. It looked good, and I got plenty of compliments on it. More importantly, I did my research and knew it had a strong reliability record.

There are many used-car options: former leases, dealership loaners, certified pre-owned vehicles, and one-year-old cars with low mileage. Any could be a good move. But like I did with my Infiniti—and not the Porsche—research the specific car before buying.

• Review the vehicle-history report and title information.
• Check the FTC Buyers Guide to see whether the vehicle is sold with a warranty or “as is.”
• Have an independent mechanic inspect the vehicle and provide a written repair estimate.
• Enter the VIN in the NHTSA recall lookup to check for unrepaired safety recalls.
• Research reliability, parts prices, and common problems for the exact year and model.

Mistake #6: Ignoring Insurance and Maintenance Costs

Auto insurance varies by state, driver, coverage level, credit-based insurance score where permitted, claims history, and vehicle type. Get a quote for the exact vehicle before signing the purchase agreement.

Don’t forget maintenance, repairs, and tires. AAA’s 2025 Your Driving Costs analysis estimated an average of 11.04 cents per mile for maintenance, repair, and tires across the new vehicles in its study.

At 12,000 miles per year, that mileage-based estimate would be about $1,325 annually. Your actual expenses can be much lower or higher based on the vehicle, age, condition, mileage, warranty coverage, labor rates, and repair needs.

Mistake #7: Not Planning How You’ll Cover Repairs

You may be comfortable handling routine maintenance, but what about a major repair?

Factory warranties vary. Some vehicles may include four-year or 50,000-mile coverage, while others use different time, mileage, powertrain, or component limits. Confirm the exact warranty for the vehicle rather than assuming one standard applies.

If you plan to keep the car long term or buy used, you may consider an optional auto service contract, commonly marketed as an extended warranty.

Before purchasing a service contract, compare its total cost with likely repair expenses and ask:

• Which systems and parts are covered—and which are excluded?
• When does coverage begin, and does it overlap with the factory warranty?
• Is there a deductible for each repair visit?
• Who approves claims, and where can the vehicle be repaired?
• Are towing, rental-car, diagnostic, and labor expenses included?
• Can you cancel the contract or transfer it when selling the vehicle?

Having an emergency fund is always something I recommend. I also like the idea of keeping a separate car-repair fund so ordinary vehicle problems do not consume the money reserved for a job loss, medical bill, or housing emergency.