Buying a New Car? These Common Mistakes Can Cost You Thousands

Buying a car involves making a series of choices with the potential to significantly impact your finances for decades. Here’s what to watch out for.

The cost of a new car recently hit a new high for 2026. According to Kelley Blue Book, the average transaction price in July came in at $49,855. Although that’s slightly below the all-time peak of $50,612 reached in December, it’s still a huge chunk of change.

When that much money is on the line, you don’t want to leave anything to chance. Buying a car involves making a series of choices with the potential to significantly impact your finances for decades, so it’s important to do some research before visiting a dealership.

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To that end, we asked experts to identify four common car-buying mistakes — and share advice on how to avoid them. Here’s what they said.

Mistake No. 1: Only budgeting for a car payment

You’re agreeing to pay not only for a vehicle itself but also sales tax, interest, insurance, fuel, maintenance and repairs. Those costs add up.

That’s why Kimmie Andrews, a financial advisor at Birchwood Financial Partners, says it’s crucial to do some self-reflection before heading to the dealership. She suggests asking yourself what you really need for safety and getting to and from where you have to be.

A flashy model might be exciting to drive but not worth the money in the end.

Before buying a car, “do the math and say, ‘How do I feel about that?’” she suggests.

If you’ve never had a car payment, it’s also important to road-test how that might fit into your budget. If you expect to have a $300 car payment, Andrews suggests you begin setting aside $300 a month so you can start getting used to a lifestyle without that cash. As a bonus, you’ll end up with a nice lump sum you can put down once you’re ready to purchase.

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Mistake No. 2: Being overly emotional

Ronald Montoya, manager of consumer advice at Edmunds, acknowledges that buying a car is not a black-and-white decision.

Sometimes we fall in love with a particular model or brand because we think it’ll indicate to friends and family that we’re successful. Other times, it’s tied to personal preference, like getting a sports car because you enjoy long drives, or self-image, like driving a truck to project a tough persona.

“If you [have your] heart set on a certain car, you might be leaning towards that whether your finances agree with you or not,” Montoya says. “That’s when we have to stop ourselves and make a hard decision.”

In these instances, Andrews encourages shoppers to remember that the selection is only temporary. Your financial situation often changes as you age, and so will the car(s) you can afford. A poll from The Zebra, an insurance website, found that the average American kept their longest-owned vehicle for about eight years.

“Give yourself the grace and space to tell yourself, ‘This is what I’m doing for the time being,’” she says. “‘I can … maybe get that higher trim level next time — with the moonroof and surround sound.’”

As for public perception, you should avoid equating someone else’s expensive car with solid financial footing. Sometimes it’s the opposite: In 2022, Experian found that 61% of people who earn $250,000 or more weren’t driving luxury vehicles, instead preferring middle-of-the-road Hondas and Toyotas.

Mistake No. 3: Adding stuff at the dealership

Bill Bergstrom, a certified financial planner with Focus Financial Network, says it’s very easy to be talked into upgrading features at a dealership: “It’s warranties, it’s service plans, it’s hood protection,” he adds. “It’s like an assault of sales. Love the car, hate the process.”

He’s not alone: In a 2025 YouGov survey, 40% of respondents said the pressure to purchase add-ons negatively impacted their experience at the dealership.

To combat this, car buyers should come prepared and resolute. You should prioritize your needs and know what’s optional. For instance, rather than being convinced to add $250 worth of windshield protectant, Bergstrom says, maybe you go buy Rain-X for $10 and apply it yourself.

“This world is perfectly designed to suck every penny out of your pocket unless you really have a focus on trying to keep it,” he says. “You can almost always get things done less expensively than [at] the dealership.”

Mistake No. 4: Forgetting the big picture

Andrews urges you to avoid being “car poor” — in other words, driving a pricey vehicle at the expense of other financial achievements, like paying off debt or saving for a house down payment.

She says you should ask yourself: “What are my short-term and near-term goals? How does this fit in? Does it align with that greater picture?”

It’s important to put a car purchase in the context of the rest of your life. (This is where a financial planner can come in handy.) Crucially, you also need to make sure you actually do something with any money you save by taking a more frugal financial route.

Bergstrom says that if you spend less on your car, you have to be diligent about taking that cash and putting it into a 401(k) or Roth IRA.

“Otherwise it ends up in a bottle of wine, a nice dinner,” he says. “There’s nothing wrong with an increased lifestyle. But if you’re trying to get ahead, you actually have to redirect some of those savings to a longer-term investment.”