Buying more car than you can afford: New car manufacturers would like you to believe you won’t be complete without their latest model, but that new-car smell can easily run you $20- to $50,000 in some cases. In reality, you may not need a car in some locations; but even if you can’t use public transportation, it isn’t necessary to buy more car than you can afford in any event.
The end result: New cars depreciate in value quite rapidly the first year and yet you will pay thousands more than the sticker price when you include higher insurance premiums and the interest to be paid on a five-year loan for a new car. In most cases, it is best to buy the right car for your wallet and to drive it into the ground.