27 Aug 2025, 14:50

Ukrainians are paying large amounts when purchasing a new car

19.3% of consumers are taking loans of $1000 or more
It is important to have prior loan approval
Certified used cars may be a better option

Purchasing a new car is becoming increasingly financially burdensome. Analysis by Edmunds for 2025 revealed that a record 19.3% of consumers financed a new car in the second quarter of 2025, committing to monthly payments of $1000 or more. This is nearly every fifth buyer who is willing to do what was previously considered an extreme car payment, due to high interest rates and rising car prices.

However, there may be reasons to consider spending more on a desired car, as taking out a high-interest loan can become a serious burden. Here are five common pitfalls that should be avoided before making a purchase.

1. Buying a car that is not affordable

It is vital to understand the difference between the possibility of purchasing and the reasonableness of whether you can actually afford it. The average price of a new car has reached approximately $49,000, which forces many buyers to stretch their budgets. Often, buyers choose financing for 72 or 84 months, which leads to significant expenses in the long-term perspective.

2. Not comparing loan terms

Delaying the selection of a loan until the moment of purchase can be an expensive mistake. Instead of this, it is necessary to have prior loan approval from a bank or credit union. This can save hundreds or even thousands of dollars over the term of the loan.

3. Transferring negative equity to a new loan

Trading in a car, the value of which is lower than the remaining loan balance, can lead to financial difficulties. In July 2025, 28.2% of cars traded in had negative equity, which complicates the situation for buyers.

4. Ignoring internet sales

Many dealerships have teams that specialize in internet sales. This can save time and money. You can compare prices and obtain written proposals for further negotiations.

5. Ignoring options for certified used cars

A new car may look attractive, but certified used cars with a track record often have warranties and cost significantly less. Most new cars depreciate 20-30% in value in the first year.

Buying a new car is one of the biggest financial decisions for most people. By avoiding these five pitfalls, you can save money and secure your financial future.