What is part of the American dream? Start a family, have a house and a car. That goal is increasingly becoming a dream that is difficult to turn into a reality with the high prices of homes and vehicles. However, there are always alternatives and strategies to meet your financial goals and today we are going to focus on explaining how you could save money when buying your car.

It is no news to anyone that car prices are sky-high and interest rates are high. The result: buying a car is expensive. Currently, the average price of a new car is around $50,000, according to Kelly Blue Book. That represents a 30% increase over 2019 levels.

Used vehicles don't offer much relief either: the average cost is already over $25,000.

And we are going to continue adding weight to our portfolio. The price of gasoline continues to rise due to international tensions and the conflict with Iran, while inflation continues to put pressure on the daily expenses of millions of families.

All of this makes buying a car a challenge. However, to give our pocket a breath of hope, there are some aspects that you should keep in mind when going to a dealership or seller so that you are clear about how much you could spend in total when purchasing your vehicle.

The most common mistake when financing a car

Many buyers focus only on the monthly payment “looking cheap”, being low; But that can become a long-term financial problem.

"People say, 'I want a car, it's expensive; if we make payments longer, I'll be able to afford it monthly,'" explained Jill Schlesinger, a CBS News business analyst.

Currently, one in four Americans finances their car for 84 months, or seven years, according to Edmunds data. The problem is that the longer the loan lasts, the more interest you end up paying.

Additionally, the average monthly payment for a new vehicle already reaches $773, not including insurance, gas and maintenance.

“We have a lot of people who pay a thousand dollars a month for their car payment,” Schlesinger said.

Therefore, specialists recommend doing the math before visiting any dealership. If a five-year loan is still out of your budget, the vehicle is probably too expensive for your current income.

They also advise arriving with financing previously approved by a bank or credit union. This helps compare interest rates and avoids accepting unfavorable conditions at the agency.

How to find a cheaper car without making mistakes

Consumer Reports experts recommend keeping an open mind and not focusing solely on large SUVs or luxury trucks, as they tend to be much more expensive. In many cases, choosing a small sedan or a vehicle with fewer extras can save you thousands of dollars on both the initial price and on gas and insurance.

Another important recommendation is to research prices before leaving home. Sites like Cars.com, TrueCar or Car Gurus allow you to compare inventories, promotions and real prices at different dealerships.

“The consumer's best tool is to be willing to walk away from the negotiation,” Schlesinger said. “If you can walk away, you can negotiate a better deal.”

Specialists also warn against paying thousands of dollars above the manufacturer's suggested price. Although some dealers add additional packages or extra charges, that can seriously affect the value of the car in the future.

Is it better to buy a used car or repair your current one?

For those who cannot find a new vehicle within their budget, there are alternatives that can help save money. One option is certified pre-owned cars, known as CPO. These vehicles are usually only a few years old, come with a warranty, and usually cost less than a brand new model.

There are also drivers who are choosing to repair their current car and wait for better market conditions. However, experts recommend not investing too much money in vehicles that are already at the end of their useful life.

"Let's say your car is worth $8,000. Don't pay $5,000 to fix it," Schlesinger explained. “At some point in the life of the car, it is better to buy a new one.”

Finally, specialists recommend reviewing the complete cost of owning a car, and not just the monthly payment you will pay. That means considering insurance, interest, gasoline and maintenance expenses. It would be of no use to get a good deal at the dealership if, adding up all the expense of your vehicle, it could turn what was intended to be a dream come true into a nightmare.

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