Avoid This Financial Mistake

A brand new car looks and smells good — but it’s never worth the price.

This financial decision is an area that might be the most difficult to avoid as most of us require a vehicle to get to-and-from various locations such as work. However, there is no need to rush on over to a dealership and put a down payment on the first car you see. The biggest mistake (aside from not investing earlier) that I have made so far in life was financing a brand new car.

Getting in and smelling that "new car" smell can be exhilarating and tempting, but you can get that same scent by purchasing Ozium's 3.5 oz. Air Sanitizing Spray through The Home Depot.

If you are still in denial and must have a new car, then I advise that you visit your local dealership on a Sunday beforehand. In 18 states across the country, auto dealers are restricted or banned from operating during any Sunday - check to see what your states' policies are. The reason for this suggestion is not to waste your day from doing other activities such as going to church or watching football; it's meant to help clear your mindset. You can see if your impulses are still affecting your decision of buying a new car without the hassle of being heckled by the dealers' car salesmen.

Another reason for going on a day without a salesmen there is to analyze how much a car you're considering will cost. A salesmen usually receives commission off of every sale that they make and are constantly trained on forcing customers into believing they are getting the best deal possible.

According to NerdWallet & Experian, the average monthly car loan payment in 2018 was $530 for new vehicles and $381 for used ones. The average lease payment (leasing is also a no-no in my opinion) was $430. If these figures seem high, that's because they are - and they're all up year over year. To make matters worse, add another $200 for the average car insurance monthly payment, and you're looking at close to a whopping $850 for that "cool new car".

SmartAsset found that the average salary of a millennial is $684 per week or $35,592 per year. To put that into perspective - the monthly stipend a millennial receives of $2,736 would be instantly cut by 30%, or would result in a monthly income of $1,906 if they decided to purchase a new car. Now, subtract the average student loan monthly payment of $280, and that brings it down to $1,626; already 40% of their monthly income is gone. Add in utilities, rent, food, and/or other expenses, and there is a likelihood that there is next-to-nothing saved.

If you are in dire need of a car, then the best bet you can take is to purchase a used car. Just from the statistics above, you can see that the average monthly car loan payment for a used car is $149 less than for those on new vehicles; the difference can become even greater if you put a down payment on a used car. With that extra money (let's say it's still $149), you can use it to pay both your monthly gas & water bills, or save it up into an emergency fund.

There are many other reasons you should reconsider before purchasing a car (such as car depreciation), but when you're ready to make the right moves, then I suggest the following:

- If you're perusing around for a car, but don't feel like dealing with a nagging salesmen, make sure to head on over to sites such as Carvana or TrueCar to gain access to thousands of great options & deals.

- You should also check Kelley Blue Book for car prices and values when buying and selling new or used vehicles. They provide information on every vehicle on the market, which gives you better opportunity to negotiate for a better price option.