What Car Should I Buy?

How to Choose a Car

Every driver has different needs, which means the right vehicle looks different for everyone. That's why it's important to understand your priorities, budget and preferences before you start shopping.

It's also crucial that you research car brands, pay attention to features and compare new and used models. Finally, you'll want to test drive each vehicle you're considering to get a feel for the driving experience, visibility, comfort, noise level and other factors.

1. Assess Your Needs

Start by taking the time to think about the general features you need in a vehicle. Some of the factors to consider include:

• Family size: If you have children or you're planning to start a family soon, you may want a larger vehicle, such as an SUV or a van, for the extra space. However, if you have no kids and don't plan on having any, a smaller vehicle may be enough to suit your needs.
• Lifestyle: If you spend a lot of time outdoors, an SUV or even a truck may be more beneficial for cargo space and towing capacity. On the flip side, if your primary driving consists of your commute and errands around town, a smaller vehicle with better fuel efficiency may make more sense.
• Location: If you live in an area with extreme weather fluctuations, including rain, snow and ice, you may want a model with all-wheel drive capabilities. But if you live in a large urban area, a smaller vehicle may be more beneficial for maneuverability and parking.
• Environmental impact: If you're a strong believer in environmental conservation, you may prefer to focus your research on electric and hybrid vehicles.

It's also important to know where your needs and preferences may conflict. For example, if you really want an electric vehicle but also enjoy taking road trips, you'll need to consider the trade-offs associated with charging accessibility and times.

2. Review Your Budget

As you begin to get an idea of the type of vehicle you want, it's important to evaluate your budget before moving forward. Start by determining whether you want to buy the car with cash, get a car loan or opt for a lease.

If you decide to use cash, your budget will be dictated by how much you have in savings. With an auto loan or lease, however, you'll need to know how much money you can afford to spend on a monthly payment.

You can do this by taking a look at your income and expenses over the past three to six months to get a sense of your cash flow. Experts recommend keeping your total car expenses, including your loan payment, insurance premiums, fuel and maintenance, to 10% to 15% of your take-home pay, but you may need to go even lower if your budget is tight.

Reminder: As you determine how much you can afford, it's critical that you also consider other important financial goals, such as saving for emergencies, your retirement fund and paying off high-interest debt.

3. Research Car Brands

There are several websites that offer expert reviews of different car brands, including Edmunds, U.S. News & World Report, MotorTrend and Car and Driver. Once you know what you're looking for and what you can afford, research some of the models that fit your criteria.

You can also read customer reviews, which can give you a better idea of what it's like to own the vehicle.

4. Review Key Features

As you research different models, pay attention to key features that are important to you. Some of the specifications you'll want to consider include:

• Fuel efficiency: Even if you're willing to sacrifice fuel efficiency for other features, miles per gallon will still have a direct impact on your budget. If you're looking at electric vehicles, you'll want to pay attention to the battery's range instead of fuel economy.
• Seating and cargo space: Look at how much space you and others will have in the cabin—including the number of seats—as well as the storage capacity in the trunk, hatch or bed of the vehicle.
• Towing capacity: If you plan to tow anything with your new vehicle, you'll want to make sure it has sufficient capacity to handle it. Experts advise against towing more than 80% of your vehicle's rated capacity.
• Drive type: Check to see if the car has all-wheel drive capabilities. If not, it can help to know whether it's front-wheel drive or rear-wheel drive. It's generally not recommended to buy a vehicle with rear-wheel drive if you live in an area that gets a lot of snow or rain.
• Dimensions: You'll want to make sure the vehicle you buy fits comfortably in your garage or other parking space. If you're used to driving a smaller vehicle, switching to a full-size SUV or truck can be a major transition, and you'll want to make sure you're ready for it.
• Safety features: Cars can offer a wide range of safety features, but some provide more than others. In particular, watch out for details like blind spot and lane departure warnings, adaptive cruise control, active park assist, automatic high beams, driver attention monitoring, collision warnings, backup camera and emergency braking assist.
• In-car entertainment: Check to see if the model has a media display with Android Auto or Apple CarPlay compatibility. If this is an important feature for you, consider the display size and connection type (Bluetooth or USB).

5. Test Drive the Car

Now that you've narrowed down your list of options to a few models, visit one or more local dealerships and take a test drive with each one. No matter how much research you do online, nothing compares to the actual experience of driving.

As you test drive each model, pay special attention to your comfort level in the driver's seat, how the vehicle handles, how easy it is to control the climate, entertainment and lighting, the noise level in the cabin, the braking system and anything else that's important to you.

Is It Better to Buy a New or Used Car?

Whether to buy new or used depends on your budget, how long you plan to keep the vehicle and what features matter most to you. Both options have their advantages, so consider your situation carefully before deciding.

When to Buy New

• You plan to keep the car for a long time. If you intend to drive the vehicle for several years, buying new allows you to benefit from the full lifespan of the car and its warranty coverage.
• You want the latest technology and safety features. New cars come equipped with the most up-to-date infotainment systems, driver-assistance features and fuel efficiency improvements.
• You prefer lower maintenance costs upfront. New vehicles typically require fewer repairs in the first several years of ownership, and most come with manufacturer warranties that cover major mechanical issues.
• You want more financing options. Lenders often offer lower interest rates on new car loans, and manufacturers frequently run promotional financing deals.

When to Buy Used

• You're working with a tight budget. Used cars cost significantly less than new models, which means lower monthly payments if you're financing or less cash out of pocket if you're paying upfront.
• You want to minimize depreciation. New cars lose a significant portion of their value in the first few years. Buying used allows you to avoid the steepest depreciation hit.
• You're okay with fewer features. If having the latest technology isn't a priority, a used car can provide reliable transportation at a fraction of the cost.
• You're buying for a new driver. A used vehicle can be a practical choice for a teenager or first-time driver who's still building experience behind the wheel.

How to Prepare Your Finances Before Buying a Car

Before you visit a dealership or start browsing listings, take some time to get your finances in order. A little preparation can help you secure better loan terms and avoid overspending:

• Check your credit score early. Your credit score plays a major role in the interest rate you'll qualify for. Review your credit report ahead of time so you can address any errors or work on improving your score if needed.
• Set a realistic budget. Factor in not just the purchase price but also insurance, fuel, maintenance and registration fees. A good rule of thumb is to keep total transportation costs below 10% to 15% of your monthly income.
• Save for a down payment. A larger down payment reduces the amount you need to finance, which can lower your monthly payment and total interest costs. Aim for at least 20% of the vehicle's price on a new car or 10% on a used car.
• Get preapproved for financing. Applying for preapproval from a bank or credit union gives you a baseline interest rate to compare against dealership offers. It also helps you understand exactly how much you can afford.
• Consider your trade-in. If you're trading in your current vehicle, research its value beforehand using resources like Kelley Blue Book or Edmunds. This helps ensure you get a fair offer.

Frequently Asked Questions

Build Your Credit Before Buying a Car

If you're planning to use an auto loan or lease for your next vehicle, it's important to make sure your credit is ready for the process. Although it's possible to get approved for a car loan even if you have bad credit, you'll have a better chance of securing a low interest rate with a higher credit score.

Start getting an Experian account to review your Experian credit report and FICO^® Score^Θ for free. Take time to evaluate your credit profile and identify any areas of concern. Then, take steps to improve your credit. While this process can take time, the interest savings can make the effort worth it.