How to avoid buying more car than you need

Matt Jones
Edmunds
Avoiding paying too much is more important than ever given the rising costs of purchasing a vehicle. The average new-car transaction price in March was $36,534, according to Edmunds sales data.

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, according to Edmunds sales data.

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.

How much truck will you actually use?

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, according to Edmunds data.

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 considering 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.

What defines luxury for you?

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 downmarket? Take a quick look at a slightly used version of the same car before you buy. Getting something as little as three years old can net you significant savings.

Consider the popular BMW 3 Series: According to recent Edmunds transaction data, the average price for a new BMW 3 Series was $51,819. Compare that to a three-year-old 3 Series, with an average selling price of $23,919 — a savings of nearly $28,000.

Why buy top of the 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 may 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 touchscreen infotainment system, Apple CarPlay and Android Auto (they allow you to connect and mirror your phone’s apps on the vehicle’s touchscreen), heated front seats, push-button ignition with keyless door access and an abundance 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.