You can't always get what you want...
As the auto expert on Doc Eifrig's team, I (Brady Holt) wrote last month about establishing your wants and your needs when you buy your next car.
Consider the bare minimum that you need from your car... consider what other qualities or amenities you'd value... and see if they're worth the money to you.
Of course, as with everything else in your life... even if you've established your wants and your needs, they need to align with your financial reality.
The average new car in the U.S. sold for $48,039 in March 2025. That's not because the average person needs a $48,039 car – or because the average person can necessarily afford a $48,039 car.
Instead, the average car buyer is financing their new car over an average period of 68 months... nearly six years. And while this can vary widely by credit score and any promotional incentives, the average annual percentage rate ("APR") for these loans comes to 6.8%.
With a $10,000 down payment and that 6.8% APR, that $48,039 car will cost an extra $7,905 in interest over the life of that average 68-month loan.
What's more... some folks buy cars by focusing on their monthly payments. That can be dangerous. Not only does it break your big expenses into small-seeming amounts – "I'm not paying $1,200 for a sunroof... I'm paying $17 a month for a sunroof" – but it can tempt you into a longer loan.
Sticking with our same scenario, the $48,039 car's monthly payment comes to $676. That's steep. But say you stretch your loan term to 84 months... Now you owe just $570 per month.
Trouble is, not only does that mean more time before your car is paid off... and more time for your car to break down before you pay it off... but it also balloons your interest expense to nearly $10,000.
But what if you could find a car that costs $38,039 instead of $48,039? Then you'd have a monthly payment of $498 over a 68-month term, with just $5,826 in interest. Or you could cut the term to 60 months, pay $553 a month, and put more than $700 worth of interest payments back in your own pocket.
For $38,039, you can already buy nearly any class of new car... Large families can get a minivan or a three-row crossover SUV. Commuters and road-trippers can get a comfortable, fuel-efficient sedan. Folks who need to tow or haul can get a pickup truck.
You'll find almost no luxury-branded cars for less than $40,000 these days. And you may have to ride on cloth upholstery instead of leather... commute without listening to a brand-name stereo... or get a midsize pickup instead of a full-size model...
In some cases, you might even need to choose a different type of car from your original hope.
While this advice won't apply to everyone's needs, most people's needs can be met at this lower price.
This is just an example of low-hanging fruit... Many people can also likely get by with spending $28,039 – or even with an $18,039 used car if other priorities take precedence. (By the time you get down to $8,039, you've increased your risk of costly repairs. Note also that used-car loans have a higher interest rate than new cars... currently averaging around 12%.)
If your budget is tight, look hard at your wants and needs to bring down your loan term and interest expenses. And if your car payment means you'd be struggling to pay other bills, set money aside for a rainy day, or save for retirement, it's doubly important to consider those priorities.
We don't mean everyone should buy the cheapest possible car. But based on the numbers, the average person is buying more car than they need... with money they don't have. You don't have to join them.
Would you rather scrape by to afford a new big pickup truck or a flashy luxury car... or set yourself up for a lifetime of financial security behind the wheel of a smaller, less dazzling, or older vehicle? Once again, this is a personal choice – but we know what we'd choose.
I recently shared more of my automotive insights with Doc Eifrig's Retirement Millionaire subscribers.
In one special report, I expand on my philosophy of reframing your car-buying purchase... offer other ways to save money on your next car... and share other information about car buying and the automotive industry.
In a second, I pick the "Retirement Millionaire Car of the Year." As I write in the report, this "isn't the biggest, the fanciest, or the fastest car in America. But it's one of the least expensive – and it has a lot more to offer than other cars costing so little." I also highlight some of the year's other great cars that also cost less than $48,039.
If you don't already subscribe to Retirement Millionaire, click here to gain access to these reports and learn about the other things Doc and his team provide in the newsletter. This includes a new monthly stock pick... a model portfolio of active stock recommendations... health and personal-finance tips... and my own "Car of the Month" auto reviews.
Do you have a car question or an experience you'd like to share? Let us know... feedback@healthandwealthbulletin.com. We read every letter.
What We're Reading...
- Did you miss it? Find your own 'best deal' on your next car.
- Something different: Car & Driver magazine's original review of the 1980 Honda Accord.
Here's to our health, wealth, and a great retirement,
Brady Holt with Dr. David "Doc" Eifrig
June 3, 2025
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