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Cars certainly arenât cheapâthe average cost of a new one is just under $50,000, and used cars are going for an average of almost $29,000. Buying a car might be necessary, but buying a new car is almost always a bad financial decisionâeven if you find ways to sweeten the deal. Either way, though, focusing on price alone when you're shopping for a vehicle is a bad ideaâprice should be just one aspect of your decision-making process.
The next time youâre on the hunt for a new or new-to-you car, make sure you take the following factors into consideration, just as much as the price.
Instead of thinking solely about the bottom-line price of the car and assuming that if you manage to cut it down a little in the negotiation youâve done your due diligence, consider the total ownership costs of the car. Aside from the interest youâll pay on financing, you should also consider:
Electric vehicles (EVs) have an efficiency rating to consider, too, and youâll be paying for the electricity to charge them up. Every EV has a rating that tells you how many miles you get out of a charged-up battery. Choosing an efficient car today will offset a higher price and enhance a lower price in the long run.
Maintenance costs are one thing. Being able to rely on your car is crucial. If you want to have fewer mornings ruined by the sound of a starter grinding and sputtering, make sure youâre buying one of the more reliable cars on the market. For example, if you purchase a Pacifica Hybrid from Chrysler, you should make sure your bus pass is current and ready to use.
As the recent âKia Boysâ plague proved, your car wonât do you much good if you canât keep it in the driveway. Even if the car youâre about to buy isnât the target of lax security and an internet meme, you should consider how frequently itâs targeted by thieves. The most-stolen vehicle in the U.S. in 2022? The Chevy Silverado, which was boosted nearly 50,000 times that year alone. If you want to have one less headache tied to your car, buy one that thieves disdain.
If youâre buying a new car, chances are you wonât be driving it foreverâthe average length of car ownership these days is a little over twelve years. So a big factor you should take into consideration when buying a new car is the resale value. All cars depreciate, but not all cars depreciate at the same rate or by the same dramatic amount. You might get a good deal on a car today, but when you try to sell it or trade it in after a few years, you might get smoked on the valueâand the time to think about that is when youâre on the lot deciding which car to buy.
Even new cars have problems, and a solid warranty can save you a lot of money and heartburn. Maybe youâre getting a good price on that car, but check the warranty to make sure youâre not getting rooked. Youâll want to know whatâs covered, how much repair costs youâll be on the hook for, how long the car is under warranty, and if specific aspects of the warranty expire at different times. You can always try to negotiate a better warranty if the standard offering isnât great, but at least know what youâre getting for the price.
One major aspect of buying a car is the use caseâthe way youâll be using the car. For example, if you need a vehicle to transport three kids and their sports equipment all over the state five days a week, buying a fun little two-seater is likely a poor decision. Make a list of the ways youâll use the car, from your commute to grocery hauls to transporting your elderly relatives to and from family gatherings, and consider whether the features of the vehicle in question will satisfy those requirements. If not, even a great deal wonât be so great in the long run.
Even if youâve negotiated a solid deal in financial terms and ensured youâre buying an efficient, easy-to-maintain vehicle, you should also check the safety rating before pulling the trigger. The Insurance Institute for Highway Safety (IIHS) awards Top Safety Picks every year, which is an easy way to determine that the car youâre buying is safe for you, your family, and other drivers and pedestrians.
If youâve ever driven a long distance, you know that even minor problems with the seat, the climate control, or the legroom can become butt-numbing miseries. If youâre going to be spending a lot of time in your carâcommuting, road-tripping, or ferrying your family around townâyou want to know whether the car is going to be comfortable. The test drive is key hereâyou canât take the vehicle to Coachella to really see if itâs comfy, but you can look for cars with a lot of adjustable features (like the steering column and seat), and donât forget to consider the impact of noise while you drive.
While most of the considerations above apply equally to used and new cars, there are some specific things to consider other than price for used cars:
The next time youâre on the hunt for a new or new-to-you car, make sure you take the following factors into consideration, just as much as the price.
Total cost
Instead of thinking solely about the bottom-line price of the car and assuming that if you manage to cut it down a little in the negotiation youâve done your due diligence, consider the total ownership costs of the car. Aside from the interest youâll pay on financing, you should also consider:
Maintenance costs. Cars are sinkholes of money because they are complex machines you will have to pay to have repaired and maintained. And not all cars are the same when it comes to the cost of keeping them in working order. Teslas, for example, have a 10-year maintenance and repair cost of $4,035, while Land Rovers can bleed you for an eye-popping $19,250 over a 10-year period. Add that number to the cost of the car and the interest on your financing to get a better idea of what youâre really spending.
Insurance costs. Not all cars cost the same to insure, so itâs worth doing some research to find out if your car will cost you $1,600 or $2,000 a year in premiums. While your own driving record and other factors go into insurance rates, the make, model, and year of the car have a lot to do with it.
Fuel efficiency. You might be getting a great deal on this car in terms of up-front price, and maybe youâve even got great financing numbers. But if the car is going to cost the GDP of a small country to fuel up, it could still be a bad deal. A car with a better miles-per-gallon (MPG) rating can translate into thousands of dollars saved at the pump.
Electric vehicles (EVs) have an efficiency rating to consider, too, and youâll be paying for the electricity to charge them up. Every EV has a rating that tells you how many miles you get out of a charged-up battery. Choosing an efficient car today will offset a higher price and enhance a lower price in the long run.
Reliability
Maintenance costs are one thing. Being able to rely on your car is crucial. If you want to have fewer mornings ruined by the sound of a starter grinding and sputtering, make sure youâre buying one of the more reliable cars on the market. For example, if you purchase a Pacifica Hybrid from Chrysler, you should make sure your bus pass is current and ready to use.
Theft rates
As the recent âKia Boysâ plague proved, your car wonât do you much good if you canât keep it in the driveway. Even if the car youâre about to buy isnât the target of lax security and an internet meme, you should consider how frequently itâs targeted by thieves. The most-stolen vehicle in the U.S. in 2022? The Chevy Silverado, which was boosted nearly 50,000 times that year alone. If you want to have one less headache tied to your car, buy one that thieves disdain.
Resale value
If youâre buying a new car, chances are you wonât be driving it foreverâthe average length of car ownership these days is a little over twelve years. So a big factor you should take into consideration when buying a new car is the resale value. All cars depreciate, but not all cars depreciate at the same rate or by the same dramatic amount. You might get a good deal on a car today, but when you try to sell it or trade it in after a few years, you might get smoked on the valueâand the time to think about that is when youâre on the lot deciding which car to buy.
Warranty
Even new cars have problems, and a solid warranty can save you a lot of money and heartburn. Maybe youâre getting a good price on that car, but check the warranty to make sure youâre not getting rooked. Youâll want to know whatâs covered, how much repair costs youâll be on the hook for, how long the car is under warranty, and if specific aspects of the warranty expire at different times. You can always try to negotiate a better warranty if the standard offering isnât great, but at least know what youâre getting for the price.
Use case
One major aspect of buying a car is the use caseâthe way youâll be using the car. For example, if you need a vehicle to transport three kids and their sports equipment all over the state five days a week, buying a fun little two-seater is likely a poor decision. Make a list of the ways youâll use the car, from your commute to grocery hauls to transporting your elderly relatives to and from family gatherings, and consider whether the features of the vehicle in question will satisfy those requirements. If not, even a great deal wonât be so great in the long run.
Safety
Even if youâve negotiated a solid deal in financial terms and ensured youâre buying an efficient, easy-to-maintain vehicle, you should also check the safety rating before pulling the trigger. The Insurance Institute for Highway Safety (IIHS) awards Top Safety Picks every year, which is an easy way to determine that the car youâre buying is safe for you, your family, and other drivers and pedestrians.
Comfort and features
If youâve ever driven a long distance, you know that even minor problems with the seat, the climate control, or the legroom can become butt-numbing miseries. If youâre going to be spending a lot of time in your carâcommuting, road-tripping, or ferrying your family around townâyou want to know whether the car is going to be comfortable. The test drive is key hereâyou canât take the vehicle to Coachella to really see if itâs comfy, but you can look for cars with a lot of adjustable features (like the steering column and seat), and donât forget to consider the impact of noise while you drive.
Used car specifics
While most of the considerations above apply equally to used and new cars, there are some specific things to consider other than price for used cars:
Mileage. Itâs obvious that every mile put on a car translates into wear and tear. A common-sense cutoff is about 100,000 miles, depending on the age of the car. The average driver puts about 13,476 miles on their car annually, so you can do some quick back-of-the-envelope math to figure out if the previous owner drove that car hard or not.
Vehicle history. You should never buy a used car without getting a vehicle history report to see if it was ever in a major accident or flood. You donât necessarily have to pay a company like Carfax, eitherâyou can run a check on the carâs vehicle identification number (VIN) for free.
Condition. It might be obvious, but if youâre getting a great price on a car that ticks all the other boxes but looks like hell, think twice. Rust and scratches, ruined upholstery, a permanent odor, or an orchestra of creaks and groans when it goes over a pothole might indicate that itâs not a great buy even if all the paperwork and math says it is.
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