Cars certainly aren’t cheap—the 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 decision—even 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 idea—price should be just one aspect of your decision-making process.
The next time you’re 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 you’ve done your due diligence, consider the total ownership costs of the car. Aside from the interest you’ll pay on financing, you should also consider:
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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 you’re really spending.
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Insurance costs. Not all cars cost the same to insure, so it’s 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.
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Fuel efficiency. You might be getting a great deal on this car in terms of up-front price, and maybe you’ve 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 you’ll 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 you’re 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 “Kia Boys” plague proved, your car won’t do you much good if you can’t keep it in the driveway. Even if the car you’re about to buy isn’t the target of lax security and an internet meme, you should consider how frequently it’s 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 you’re buying a new car, chances are you won’t be driving it forever—the 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 value—and the time to think about that is when you’re 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 you’re getting a good price on that car, but check the warranty to make sure you’re not getting rooked. You’ll want to know what’s covered, how much repair costs you’ll 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 isn’t great, but at least know what you’re getting for the price.
Use case
One major aspect of buying a car is the use case—the way you’ll 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 you’ll 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 won’t be so great in the long run.
Safety
Even if you’ve negotiated a solid deal in financial terms and ensured you’re 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 you’re buying is safe for you, your family, and other drivers and pedestrians.
Comfort and features
If you’ve 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 you’re going to be spending a lot of time in your car—commuting, road-tripping, or ferrying your family around town—you want to know whether the car is going to be comfortable. The test drive is key here—you can’t take the vehicle to Coachella to really see if it’s comfy, but you can look for cars with a lot of adjustable features (like the steering column and seat), and don’t 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:
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Mileage. It’s 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.
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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 don’t necessarily have to pay a company like Carfax, either—you can run a check on the car’s vehicle identification number (VIN) for free.
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Condition. It might be obvious, but if you’re 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 it’s not a great buy even if all the paperwork and math says it is.
