Are you confused when it comes to deciding on which type of car is best suited to your needs and will save you the most money? Do the choices of year / make / model / configuration / resale value / fuel efficiency / service availability and warranty make your head spin?

No need to worry any further. Help is at hand… Listed below are the broad categories, (including tips and principles) that address your concerns. Ready to start? Let’s Go!

There are 3 main cost factors to consider when choosing any car. They are initial purchase cost, running cost, and eventual sale price. The aim is to “buy for less, run for less and sell for more.” The best car is the one that suits your needs and saves you the most money. Agreed?

Factor 1. Fitness for Purposes

The first issue to be addressed is finding the right type of car, whether it’s an SUV, station wagon, utility, 4 Wheel Drive (4WD), car or people mover, depending on your circumstances. Within these choices is it to be a small – medium or large version?

Tips – the best type of vehicle for you can be determined by answering some easy questions:

How many seats do you need? Are your safety needs addressed? How many kilometers (miles) do you travel each year? Do you need to tow a caravan? How many years do you intend to keep this car? Do you need the extra traction a 4WD can offer? Is it to be work / family / school or shopping transport?

Factor 2. Price

The next consideration is how much you can afford to spend on the vehicle based on your decision in 1.

Tip – It would not be wise to buy a car that suits your needs if it is so highly priced that it ruins any chance of you saving money for your future. You lock yourself into payments and service costs so high that it leaves broke (relying on your credit card) at the end of each month.

Used car prices, of course, are lower than new prices, but there are other benefits. The initial 1st year major value drop has already taken place and you may be able to do some maintenance tasks yourself without voiding the warranty – saving you more money. Also collision insurance and taxes are also generally lower.

Tip – set a budget based on your ability to pay (while still saving money each payday) and stick to it.

Factor 3. Value Slide During Its Useful Life

Now that we have decided on the best type of vehicle and the best price lets now look at the depreciation, or loss of value, over the time you will keep it.

It is well known throughout the vehicle industry that once you buy a new car the value drops about 45% (on average) in the first 3 years of ownership. Then about 25% drop (on average) over the next 3 years after that. (source:http://editorial.autos.msn.com/article.aspx?cp-documentid=435466l)

However, there are types and makes of vehicles that do better and worse than the average.

Tips – to reduce the chances of larger than average value slide during your ownership you may wish to take into account these principles: