On March 26, 2025, President Trump announced a new 25% tariff on imported automobiles and auto parts that came into effect on May 3, 2025. Just a month after the original announcement, a follow-up executive order introduced adjustments that offered potential discounts to manufacturing vehicles for companies across the US. However, it is still uncertain whether this strategy will promote local manufacturing or simply raise costs for consumers and automakers.
Many consumers are asking tough questions as prices are likely to rise. You need to buy a car now.
While we understand the instinct to act quickly, key financial decisions deserve more than fear-based responses. As we have already seen, tariff policies can change quickly. Also, you can’t control policy shifts, but you can control how you manage your money.
Walk around why buying a car now costs you more, when it makes sense to buy it now, financial questions to ask yourself, and how to prepare if you decide to move forward with your car purchase.
Why can you hurry to buy a car?
Buying a car isn’t just about the purchase price. It also includes long-term costs such as maintenance, car insurance, gas and repairs. If mortgage rates are rising, it is important not to rush to buy a car just for a change in tariff policy so you don’t try to buy a home.
Strong emotions like fear, urgency, and anxiety can cloud your judgment. Acting from that space can lead to financial burdens later or may regret it.
When it makes sense to buy now
It’s wise to avoid panic buying, but there are good reasons why buying a car could be the right economic move, regardless of tariffs. If you fall into any of the categories outlined, car purchase prioritization could actually protect your financial stability in the long term.
There is currently a shortage of reliable transport
If your car is frequently broken down, has very high mileage, or requires continuous repairs that become increasingly expensive, it’s time to begin planning a replacement.
Reliable transportation is a fundamental need for work, caregiving and access to school. This is especially true in neighborhoods that do not have reliable public transport.
You’re already going to buy a car – and you’re financially ready
Buying a car is already part of your 2025 plan, and if you’re preparing for expenses, tariffs may simply accelerate your timeline – not completely derailing.
You love cars – and have a way to go with thoughtfulness
If the car is your joy and you are saving, investing in retirement, and planning for debt rewards, ask for it intentionally, not impulses.
Important financial questions to ask before purchasing
Before determining whether it’s the right time to buy a car, it’s essential to ask yourself the underlying financial questions whether it’s a tariff. These questions will help you ensure that your decisions support both your short-term needs and your long-term financial health.
Do you still have emergency funds after purchasing your car?
It may be appealing to pay a down payment in your car or immerse yourself in savings to buy it completely. However, it is dangerous to do so at the expense of emergency funds. Ideally, you should save at least a month of expenses in a high-income savings account after the funds are used to purchase a car. Your emergency funds are an important part of your financial safety net and should remain as is.
Have you confirmed that you can afford monthly payments?
If you are funding your car, it is important to understand monthly costs based on the car loan fees you are offering and the amount you owe. Use your car loan calculator to plug in different interest rates and loan terms to get a realistic feeling of payment. This step will help you decide on monthly payments that fit comfortably in your monthly budget.
Is your credit score strong enough to secure a low interest rate car loan?
A higher credit score can significantly reduce the interest you pay over the lifespan of your loan. Ideally, the score should be at least 670 before funding the car. If your score is low, consider ways to enhance it before applying for a car loan.
Have you budgeted for all new car-related expenses?
The cost of owning a car is exceeded your monthly payment. Be sure to explain:
You’ll want to adjust your budget accordingly to make sure you have room for these regular expenses. Being proactive now will help you avoid feeling financially growing later.
How to prepare your finances before you buy
If you decide that buying a car is the right move for you, then follow these two steps to ensure that your new car doesn’t become a financial burden for the future.
Build or check your car maintenance sink fund
Owning a car means you are ready for the inevitable maintenance costs. Create a dedicated thinking fund for your vehicle-related expenses high income savings account. At the very least, this fund must cover:
Prepare these common and expensive maintenance costs now to avoid the financial stress of scrambling to cover them later. Think of this fund as a “when” financial cushion for car maintenance, not “when”;
Test your future car payments
Simulate in real life before committing to a new monthly payment. Once you have estimated your expected car payments with the help of a calculator, you will automatically start transferring the amount to a high-yield savings account each month. This approach allows you to:
Not only will you get more savings in a few months, but you will also have real data on how new car payments will fit your current lifestyle.
Zoom out and think about it for the long term
When you are weighing your decision to buy a car, take the time to zoom out and consider your full financial situation. It’s not just what today’s headlines emphasize. Even if you buy now and move forward, don’t forget that tariffs are likely to increase the costs of auto parts as well.
If the cost increases with either method, make sure these increases are intentional and well planned, not out as a result of fear or urgency. Rapidling to buy without a solid financial strategy can lead to unnecessary burdens later.
Slow down. Zoom out. And trust that choosing from emotionally neutral and informed locations is a better investment in long-term financial health than responding to short-term market changes.
