What Car Should I Buy? Here Are 12 Factors to Guide Your Decision

1. Your Budget

One of the most significant determinants of what kind of car you will buy is your budget. So many people wonder how much car can I afford.

A good rule of thumb is not to exceed 10% of your take-home pay on a car payment.

If you are paying cash instead of financing it, setting your budget to a vehicle that would have cost 10% of your take-home pay for a car payment is also a good idea. This way, you are not depleting your resources by buying a car that takes up too large of a portion of your total wealth.

2. Your Needs

Your vehicle can be a critical component for your job or side hustle. Therefore, it is essential to consider how far your commute is, and if you drive it during your work, this becomes even more important.

3. How Big does it Need to Be?

Do you need a vehicle to carry around multiple passengers? Do you need space for hobbies?

As a general rule, everything is more expensive with a larger car. Even the tires are more costly for a higher weight rating. So you will want to take into account how often you will be carrying multiple people or extra gear with you. For example, do you need an SUV rated for eight people when you have a family of four?

4. Fuel Economy

It would seem that fuel economy is often viewed with too much importance or not enough importance when purchasing a new vehicle. Usually, fuel economy is at the top of the list of important factors when buying a car or barely makes the radar.

The reality is that fuel economy can impact the total cost of ownership of your vehicle. To get an estimate for the cost of fuel on your car, you can look at the mileage on your current vehicle, subtract how many miles were on it when you bought it, and divide by the number of years you have owned the car. Once you know the average miles per year, you can divide by the average mpg of the new vehicle and multiply by the current price of fuel.

For example: if you have driven your current vehicle 65,000 miles in 5 years. That is 13,000 miles a year, or 65,000 divided by 5. If the new car you are looking at gets 25mpg, it would burn 520 gallons a year or 13,000 divided by 25. If the gas price is currently $2.75 a gallon, you would be paying $1,430 a year in gas for the vehicle, or 520 times 2.75.

In comparison, a car with 35 mpg would cost $1,021 a year in fuel. The result is over a $400 savings. Over five years, this will amount to $2,000 in fuel consumption.

5. Amenities

With vehicles, there are tons of trade-offs. Getting more amenities within your budget will likely mean getting a smaller car. The practical advice would be to get the best platform you can afford and skip the amenities. That would likely lead to buyer’s remorse, and you will be right back in the dealership looking for a new car in short order.

My advice is to figure out which amenities will make you feel good about your car. Don’t prioritize ones that will feel good to show off to your friends because that won’t last. In a year or so, they will be old news. You shouldn’t need all the bells and whistles to feel good about your car. Warren Buffet purchased the most basic Cadillac they would sell him.

It is ok to prioritize features that will enhance your driving experience. For instance, adaptive cruise control makes driving less fatiguing and road trips more enjoyable.

6. Edge Cases

A little consideration you should make will be edge cases. One example of an edge case would be to haul lumber or large items that you would infrequently order. It may be convenient to have a large vehicle to accommodate these cases, but it likely would be cheaper to pay the store to deliver the items.

7. The Future

How will your needs change over time? It is prudent to plan on keeping a vehicle for at least five years. In that time, are you planning on having children? Do you think there is a possibility that your job might change? Do you think you will want to start a side hustle that relies on driving around? All of these things can impact which vehicle you should choose to drive today.

As the price of fuel fluctuates, it can have an impact on your budget. If you purchase a vehicle that is not fuel-efficient, the effect on your budget will be much more significant. The psychological cost at the pump will also go up because when your fuel costs are impacting your whole budget, remembering how bad of gas mileage your vehicle gets will sting.

It is all will about reducing buyers’ remorse. The transaction cost of switching vehicles down the road because you are not happy with your decision will cost more to your overall wealth than even whether you got a “good deal” or not when purchasing the vehicle.

8. Style

You will be spending a considerable amount of time in your car. If you are not going to, then it is probably time to re-visit the decision of buying a car at all.

People think of their cars as an extension of their identities. For better or worse, this seems to be the truth of the matter regarding vehicles. If you

9. Electric or Not

Should you buy an EV or a gas-powered vehicle? There are a few questions to consider for this.

• Do you routinely drive further than the EV’s range?
• Can you charge your car at home?
• Do you qualify for tax credits?
• What will the fuel savings be?

After answering those questions, the pros and cons of an EV should be a little more clear to you. At the end of the day, it will likely come down to preferences. It is hard to tell what the future cost of gas will be over the next few years.

Any trip you have to make that is longer than the EV’s range will be a little more complicated than a gas vehicle.

10. Latest Safety Features

With innovations made over the years from crash testing, the field is a lot more even than it once was for physical performance during a crash. However, there are many advances in technology for electronic safety features.

Some of these features are blind spot detection, lane assistance, coll

I know I have benefitted from cross-traffic detection when backing up my minivan before. The cameras could detect oncoming traffic where it was in my blind spot. Even if the scenario would have otherwise resulted in me slamming the brakes after backing a little and seeing the traffic, being alerted before I even saw the oncoming traffic reduced stress.

11. Get Pre-Approved for a Loan

When you walk into a car dealership, there are so many variables at play. Which car is the right one for you? How much car can you afford? Can you get financing at a reasonable rate?

By getting pre-approved for a loan, you can answer your budget questions and get suitable financing before you ever step into the dealership. You don’t have to tell the car dealer you have been pre-approved for a loan either. That way, you can see what they offer you as well. FICO dictates that it counts toward the score as one pull if your credit is pulled multiple times for auto loans in 14 days.

Another advantage to getting pre-approved for a car loan ahead of time is that it will allow you to correct potential errors with your credit score. For example, if you apply for a loan and tell you your FICO is much lower than you expected, they will provide you with a copy of the credit report. Then you can look into getting these things fixed.

If you were at the car dealership in their finance office after you have agreed to purchase a car, there is a high chance you will take an alarming rate to continue with the deal.

12. The Test Drive

Test driving a car will give you a better opportunity to understand what it is all about than any stats on a webpage or photos of it could ever do.

When you narrow your search down to 3 different cars, call the dealerships up and schedule a test drive for each of them on the same morning. The morning is better if at all possible because the dealership will not be as busy.

After the Test Drive

After you have done the test drive, you should feel much more confident that the car is the right pick for you. Since you are pre-approved for an auto loan, you don’t need to negotiate with the dealer. Instead, you can focus on negotiating the price of the vehicle.