affordability

Outside of buying a home, purchasing a vehicle is one of the most consequential financial decisions a lot of people will make. It follows, then, that financial gurus and well-meaning friends, family members, and neighbors have all sorts of advice for young people looking to make what might be their first life-altering purchase.

The only problem is, buying a car has changed dramatically in the last several years—never mind the last couple of decades—and much of the standard advice is horribly outdated. Young people today, whether they have a lot of money in savings or (more likely) not, still need to get around in a world that was built for cars and not people. So they're turning to a different playbook. Here are some of the old rules they've been forced to ditch.

1. Only buy in cash

Financial guru Dave Ramsey is a big proponent of never taking on a car loan or monthly auto payment, insisting that if people can't afford to buy their car outright in cash, they shouldn't buy it at all.

This one may have worked in 1985 when the average cost of a new car was $12,000. But in 2025, that figure has skyrocketed to a whopping $50,000.

Simply put, very few people can afford to lay out the cash for a new car and buy the whole thing outright. The reality is that taking on a car payment might be necessary, and it's not the end of the world.

"I see people deplete their entire savings to purchase a car, without factoring in all the high-ticket expenses coming up for the rest of the year," says AJ Schneider, a financial strategy coach with Beyond The Green Coaching. "This is a huge red flag and usually driven by the outdated mindset of 'I don’t want a monthly car payment.' There is nothing wrong with a monthly car payment—as long as you can afford it. I would rather someone use a portion of savings plus take on a manageable payment than wipe out their entire safety net."

2. Always buy used

This one is (was?) based on solid logic. Cars depreciate massively the instant you drive them off the lot. So, in theory, a gently used car should be a much better value than a brand new one. This is another classic Ramsey piece of advice—if you can't afford to a buy a new car in cash, find a reliable used vehicle that you can buy instead.

However, that advice doesn't account for the fact that used car prices have surged dramatically. The average used car sells for nearly $26,000 these days. Yes, that's a lot cheaper than buying new, but it also means you're not getting the full warranty and coverage you get with a brand new vehicle, and you could be walking into a lot of maintenance pitfalls if you're not careful. For those reasons, and with such a high price (the median American household has just $8,000 in savings) a lot of folks don't even find it worth it to buy used anymore.

Take it from someone who grew up driving a rotation of $2,000 beaters. It's a nightmare when you can't get to school or work because you have an unreliable car that always needs a repair. Oh, and those $2,000 beaters cost $10,000 now. People without tens of thousands in the bank need a way to get to work, too.

"Always buy used." Photo by TopSphere Media on Unsplash

3. Never lease a car

Financially, this is still solid advice, at least in the long term. Leasing has typically been reserved for wealthy folks with a lot of disposable income, who want to trade in their luxury vehicle for the newest model every couple of years. (My late grandad was famous for always having a new Infiniti or Lexus in the driveway.)

But more and more people are choosing to lease their vehicles these days, so it's worth examining why. For starters, leasing can have lower costs up front. Some folks need (or just want) a higher-end vehicle than they could normally afford, and leasing can make those choices accessible without a huge long term commitment. Leasing also saves you the hassle and expense of repairs and maintenance. At the end of the lease, you can walk away and start over with another brand new car. Many people now choose to lease EVs, electric vehicles, because they depreciate so much faster than traditional cars.

“Younger buyers like predictability. Leasing gives them a fixed cost, new tech every few years, and less risk with depreciation. It’s becoming a lifestyle decision, not just a financial one," writes Jack Carlson, CEO of Carvia.ai.

Leasing is not right for everyone, or even for most people, but in 2025 it's no longer a complete non-starter like your dad probably told you it was.

4. Study up on hardball negotiating tactics

Older generations will try to warn you about the "art of the deal," the back and forth that takes place between salesperson and customer. They will advocate for coming in with a lowball price, walking away to let the dealership stew, and playing multiple dealers against each other in an intricate ballet.

Simply put, dealerships in 2025 don't care. They don't have that many cars in stock, anyway, and there will be plenty of other customers coming by while you're off giving them the silent treatment.

Money Magazine writes, "Overall, haggling at the car dealership has simply faded ever since supply shortages emerged in the auto industry in 2021. Car dealerships generally aren’t under much pressure to move vehicles by offering discounts or engaging in negotiations with customers because their cars are still selling fast for around the full price or more."

Don't expect them to come crawling after you, offering discounts, or throwing extra perks your way in order to close the sale. The best you can usually hope for in 2025 is to pay the MSRP (Manufacturer's Suggested Retail Price).

But some of the things your parents and grandparents taught you are still solid.

Though the world has changed and everything has gotten more expensive, the Baby Boomers had the right mindset when it came to making such a big purchase. We can still learn a thing or two by how they approached the process.

1. Arm yourself with research

Buying a car, even though you can do it online, isn't like buying from Amazon. You can still get ripped off if you're not careful.

(In other news, soon you'll actually be able to buy a used car, with financing, from Amazon in just one or two clicks.)

“Before you even show up to the dealership, you should already know what model you want and what it is actually selling for. Walking into the dealership is not the time to research a car," says Stephan Shipe, Ph.D., economist, professor, and founder of Scholar Advising.

And once you're there, the work isn't over. Ask questions. Especially if you're buying a used car that might have a sketchy history, remember that dealers aren't required to tell you everything unless you ask.

"Asking questions is how you avoid making a bad purchase," says Michael A. Klitzke, Esq., an attorney who specializes in fraud cases against car dealerships. "Ask every question you can think. Prior accidents and damage are the common questions but consumers should ask more. ... Ask if there is anything at all that is wrong with the vehicle. Ask about the maintenance history. If it turns out that the dealership lied to you (which happens frequently), these same questions are going to be the basis for a lawsuit."

Older generations loved taking used cars to "their guy" (mechanic) for a lookover before they purchased. You can still do this today, and Klitzke says more young people should take advantage of the opportunity to ensure they don't end up with a lemon.

2. Read the fine print

Don't just focus on the monthly payment, if you're taking one on. Consider the long-term costs of the vehicle you're buying and, especially, the terms of the loan.

“Dealerships will frame everything as a monthly payment because the terms are not fixed anymore," says Shipe. "I have seen eight- and even ten-year payment terms, which lets them make almost any car fit whatever monthly number you say you can afford.”

Affording a car is much harder now than it was for previous generations, but even still, you don't want to make a rash decision that will hurt you financially in the long run anymore than it already has to. A loan that long might make the car affordable in the short-term, but it is a massive commitment with huge risks.

Buying a car has gotten more expensive across the board. Young people (and all people, really) today have had to find ways to make it work.

Doing something responsible like buying "affordable and reliable" has changed. A Toyota Corolla, for example, often considered a reliable and decidedly un-flashy choice, goes for about $20,000 today. That's a good deal compared to the other choices out there, but in 2000, it would have only cost about $13,000. (Take a wild guess if wages have matched that rapid increase.) The Financial Times writes that there's "no such thing as an affordable starter car anymore."

All the tips and tricks in the world can't change those simples facts. One article from Investopedia recommends young people have their parents give them cash for a down payment—seriously.

This is why more and more people are choosing not to own a car at all. Households with multiple cars have increased, but so have households that own zero. In fact, nearly half of young Americans report not even wanting to own a car and would prefer having better access to ride-sharing, public transport, and other mobility options. Can you blame them?

If you do find yourself in need of a new or used car, everyone you know is going to want to give you advice. It's important to note the year in which they last bought a car before you decide whether or not to listen to them.