Car shoppers often spend too much. But the culprit isn’t necessarily shady dealership practices, deceptive advertising or plain old bad luck. Instead, many simply end up buying more vehicle than they actually need.
Avoiding this pitfall is more important than ever given the rising costs of purchasing a vehicle. The average new-car transaction price in March was $36,534, Edmunds sales data show. Auto loan interest rates aren’t helping, either. Interest rates averaged 6.36% for new cars and 9.5% for used cars. These rates are the highest they’ve been in a decade.
Here are a few shopping scenarios that tend to get people in over their heads. If you use these examples as a starting point, the chances of going overboard with your next vehicle purchase drop dramatically:
Too much truck
The Chevy Silverado, Ford F-150 and Ram 1500 were the three best-selling vehicles in the United States last year. These trucks are often luxurious and roomy and almost always offer significant towing and off-road capability.
But these trucks don’t come cheap. The F-150 is the best-selling of the three, and the average transaction price for a 2019 Ford F-150 between January and February of this year was about $52,300, Edmunds data show.
Unless you need all the capability these trucks offer, it may be worth looking at some less expensive but still very capable alternatives.
For example, a buyer eyeing a full-size Silverado might be just fine with a midsize Colorado. Although it is smaller and less spacious, the Colorado is far from petite. It can seat up to five passengers and tow up to 7,000 pounds. It typically gets slightly better fuel economy than the larger Silverado, too.
Based on asking price and exact trim level, a Colorado can save a buyer upward of $10,000 compared to the larger Silverado. On a 60-month loan with the average interest rate of 6.36%, that equates to a savings of about $195 per month.
Defining luxury
Plenty of people shop for a luxury vehicle because they love its styling or want brand cachet. But if a refined ride with plush appointments is all you’re after, take a look at the latest non-luxury vehicles.
The Buick Regal Sportback, Honda Accord and Mazda 6, for example, can easily rival entry and midlevel luxury sedans in terms of ride comfort, interior features and technology. This switch can save you anywhere between $4,000 and $15,000, depending on the level of equipment.
Can’t be swayed to move down market? Take a quick look at a slightly used version of the same car before you buy. Getting something as little as 3 years old can net you significant savings.
Consider the popular BMW 3 Series: Recent Edmunds transaction data show the average price for a new BMW 3 Series was $51,819. Opt instead for a 3-year-old 3 Series, with an average selling price of $23,919, a you save nearly $28,000.
Why buy top of line?
New cars today are increasingly upping the ante with their standard equipment as a means of complying with federal requirements or meeting consumer demand. Prices have risen across the board, in part because of increased standard equipment.
Yet you might be surprised by just how well-equipped a base model can be.
Take the 2019 Hyundai Kona crossover SUV, for example. Its SEL trim level, which is the Kona’s second-most affordable trim, comes standard with a touch screen infotainment system, Apple CarPlay and Android Auto (they allow you to connect and mirror your phone’s apps on the vehicle’s touch screen), heated front seats, push-button ignition with keyless door access and a host of advanced driver safety aids.
The manufacturer’s suggested retail price for the front-wheel-drive Kona SEL is a reasonable $22,845, including destination charge.
While some more luxurious features such as premium audio systems and fancy leather upholstery will only be found at the top of a vehicle line, you might be completely satisfied buying a model lower down the totem pole. Doing so can save you thousands of dollars.
In our Kona example, you’d save $10,150 compared to the Kona’s top Iron Man trim level with all-wheel drive.
Edmunds says
One of the easiest ways to save yourself money is to resist the urge to overbuy. When weighing your options, be sure to ask yourself if you really need, or will use, all of the features in the car you’re buying.
Matt Jones is a senior consumer advice editor at Edmunds. Twitter: @supermattjones.