Driving Financial Success: A Smart Way to Buy Your Next Car

I love cars. If I could, I’d swap out my ride every few months just for fun. But here's the thing—buying a car is one of the most impulsive, emotionally-driven financial decisions people make.

Whether it’s because your old car broke down, you’ve got a new baby on the way, or you’re afraid that cool ride you’ve been eyeing is about to be sold to someone else, vehicle purchases often happen in a whirlwind. And if you’re like me, you know how easy it is to be tempted just because something fast and shiny rolled past you on the road.

But car buying is unlike any other major purchase. The second you sign the papers and drive away, your vehicle is worth less than you just paid. That means you’ve got to be wise if you want to make the most of your hard-earned dollars. Most stories I hear are about someone who buys a vehicle and pays more than they intended. Before we get into my buying tips, let’s talk vehicle valuations.

A Case for Buying Used

Let’s talk depreciation. Depreciation is just a fancy word for your car losing value over time, mainly because of wear and tear and market demand. A new car loses about 20% of its value in the first year alone [^1]. After that, you can expect another 10–15% drop each year. That means by year five, you’ve likely lost 50–60% of what you originally paid.

Let’s say you buy a car for $40,000. One year later, it’s worth about $32,000. After two years, $26,800. By year five, you’re looking at around $16,000, if you’re lucky. That’s like dropping $24,000 into a metal trash can and lighting it on fire.

Now compare that to a used vehicle that’s already gone through the deep depreciation curve. Buying used means your wealth-building doesn’t take as extreme of a hit. You’ll often get higher-end features and more value for your dollars.

A Word About Payments

According to Experian [^2], the average monthly payment in early 2025 was $745 for new cars and $521 for used. 😱 Before you sign up for that kind of commitment, ask yourself: What could you do with an extra $500–$700 a month? Invest it? Travel? Pick up a new hobby? That car payment doesn't just cost you money—it costs you freedom.

A Better Way

Before you buy brand new, consider something different: a 3 to 4-year-old used car. And better yet, buy it in cash. Unless you’re already filthy rich, a brand-new car just doesn’t make sense. Save the celebration for the day you’ve built enough wealth that buying new won’t derail your financial future.

Here’s how to do it:

• Gather up all the cash you can muster.

• Buy used, in cash. If that means a $6,000 car for now, so be it.

• Keep saving some of what you would have spent on a monthly payment.

• When you have fat savings, sell your current car and add the proceeds to your savings to move up to the next level of vehicle.

• Repeat the process and level up in car each time.

This works because when you sell your current ride, its value hasn’t dramatically dropped. You get high-end features and tech at a discount. Continuing with no payment = more margin in your life.

Buy With Success: A Framework

Even if you’re not totally sold on my anti-new-car message, here’s a practical car-buying framework I use and recommend:

1. Set your budget first. Decide if you're paying cash or financing. If you’ve decided to buy in cash, you’ve made it easy on yourself. If financing, determine how much and how long you're comfortable paying. Account for taxes, doc fees, and plates, too.

2. Start saving early. Don’t wait until you’re desperate. Think ahead and use a sinking fund.

3. Define your must-haves. Research, test drive, and take your time. Great tools exist to help you learn the range of prices people are paying in your area. If you know the exact model, trim, and year you want before you start shopping at a dealership, even better.

4. Secure financing in advance. Get pre-approved through a credit union or online bank. Walk into the dealership with financing leverage.

5. Bring someone with you. Dealers are good at wearing you down. Bring a friend who knows your budget, goals, and helps you resist the sales tactics you’ll encounter.

6. Negotiate the car price, not the out-the-door price. This is one of those areas where the dealerships will try to play games. If they are, seriously consider exiting. The good news is that dealerships exist that don’t work this way.

7. Be ready to walk away. Seriously—this is your superpower. If your offer price is truly too low, they’ll let you go. Otherwise, they’ll probably stop you or call you the next day to ask if you’re still interested.

8. Always get an inspection. If it’s used, have your mechanic look at it. If they won’t let you do that. 🚩 When we were looking for another family car last year, we took a vehicle to our mechanic, who discovered that the dealer had reset the codes indicating an emissions issue!

9. Say no to extras. The final step is going to the financing office to sign paperwork. This is where they try to get you to sign up for their financing and extras. Dealers make a lot of their profit here. There isn’t anything in that office you need to walk out with except for the keys to your new ride.

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It’s Not About Being Cheap—It’s About Strategy

You may think, reading this, that I am an anti-new car guy and shame anyone who buys one. In fact, I love being able to tell clients who are in great financial shape, "You're solid, go for it." Earlier this year, I had the privilege of saying that to a client buying a $50,000 car. That’s fun.

But if you're not quite there yet, be strategic. Your future self will thank you for every dollar you didn’t light on fire. If you’re looking for a partner to guide you through car buying or other major financial decisions, let’s talk.

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Sources:

[^1] Edmunds. "How Fast Does My New Car Lose Value?" https://www.edmunds.com/car-buying/how-fast-does-my-new-car-lose-value-infographic.html

[^2] Experian. "State of the Automotive Finance Market: Q1 2025." https://www.experian.com/blogs/ask-experian/average-car-payment