by Tom Lapointe

Created on: March 11, 2010   Last Updated: March 12, 2010

For many, a vehicle purchase has always been a major financial decision, and our unpredictable economy means many people have adjusted priorities in every aspect of their finances, including cars. Even with America’s battered financial situation, upwards of 10 million new cars will be sold this year. That number is off substantially from the 17 million of years past, but it proves that people are still buying a bunch of new cars. If you’re planning to join them, you probably want to make the best possible purchase decision to the family needs in the years ahead.

The collapse of many manufacturers means there may be fewer nameplates to choose from, but the latest options for hybrid and clean diesel technology mean choosing the best vehicle for your needs can be harder than ever. Edmunds.com and other purchasing sites recommends choosing what you need, not what you want, in the new economy. Here are six important steps to help you do just that:

1) Determine your budget
2) Anticipate your needs for up to five years
3) Study your finance options
4) Consider all aspects of cost to own
5) Establish a shopping plan and stick to it

Step 1: Determine Your Budget

If you determine your budget BEFORE you start searching for the perfect vehicle, you can avoid the pitfalls that buying based on emotion can create.
MSN Autos emphasizes that you should ‘Control your Emotions’ when you are deciding how much to spend on your car. “All too often emotions overrule logic and people get into trouble. If you can’t afford it, don’t buy the car,” Bob Litwin tells MSN Autos. He is the Director of Creditor Community Relations for the Houston branch of the Consumer Credit Counseling Service (CCCS), part of the nonprofit National Foundation for Consumer Credit.

A final budget thought: a traditional target for car payments is 20% of the budget, but choosing an even lower payment can help protect you if your income or the economy changes – like the return of $4-per-gallon gas or tax increases. (online: http://bit.ly/CarShop1)

Step 2: Anticipate your needs for up to five years

Again, here is where sites like Edmunds emphasize needs versus wants, and encourage you to look at drive train requirements (2- or 4-wheel-drive, transmission, towing, etc), safety features, cargo or passenger capacity, and other factors. We’re going to suggest you take things one step further, and carefully anticipate your needs up to five years down the road.

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