How to find the right car for your budget
7 steps to getting the best car you can actually afford
So you’ve got a rough idea of how much you can spend on a car. Now what? Even after you filter by price, there are so many hundreds of makes, models and years to consider that picking the right one can feel daunting.
So what’s the fastest way to narrow your choices to a list of 10, then five, then three before buying the right car? How can you factor in the cost of ongoing maintenance? And which body style (e.g., sedan, crossover, SUV) is a fit for your lifestyle?
Key insights
- If you haven’t established a budget, 35% of your pretax annual income is a good place to start.
- Find the perfect car for your budget by choosing a body style and then filtering down by desired features, the ongoing cost of ownership and which car feels right on a test drive.
- Two vehicles that cost the same may have wildly different costs of ownership, so it’s important to check Edmunds’ True Cost to Own tool and other free tools before buying.
- It’s a good idea to get insurance quotes before you buy; premiums can vary wildly between similar vehicles.
Getting the right car for your budget: a checklist
To find the right car for you, consider cost (including insurance, maintenance and repairs), vehicle style and features, safety ratings and brand reputation. If you can, take the car out for a drive before you commit.
1. Determine your budget
As a general rule, it’s best to spend no more than 35% of your pretax annual income on a car. So, if you make $50,000, your budget for a car would be around $17,500.
Even if you’re financing, it’s still a good idea to focus on the overall sale price of the car, not the monthly payment, during the budgeting and research stage. That’s because dealerships love to steer the conversation toward the monthly payment rather than the sale price so they make deals look more appealing than they truly are.
» IS BUYING THE RIGHT MOVE? Leasing vs. buying a car: pros and cons
2. Find the right body style
Once you have a general budget in mind, there are countless ways to start narrowing down your choices. Do you want a safe car? A fast one? Something practical but fun to drive?
With so many possible approaches, we find that a quick and efficient way to massively narrow your choices is to pick a body style. Once you determine you want a crossover (or a truck or a convertible), narrowing your options from there becomes much easier; you’ve effectively filtered out up to 90% of all new and used cars.
» MORE: How to buy a used car
To help you pick, here are some of the pros and cons of each major body style:
| Vehicle body style | Pros | Cons |
|---|---|---|
| Sedan | Versatile, affordable, lots of selection | Limited cargo space |
| Crossover | Tall driving position, easy to drive, more cargo room than a sedan | Often more expensive and less engaging to drive than equivalent sedans |
| Wagon | Cheaper, sometimes sportier than a crossover with equivalent cargo room | Limited selection due to the rise of crossovers |
| SUV | Towing capacity, room for 5 to 7 passengers, big and safe, off-road capability | Poor fuel economy, priced higher than crossovers |
| Truck | Utilitarian, towing capacity, lasting value, off-road capability | Poor fuel economy, high price, can be difficult to park and navigate in urban settings |
| Minivan | Safe, comfortable, ideal for families | Priced higher than equivalent crossovers |
| Hatchback | Sportier than a wagon, better cargo space than a sedan | Limited selection, especially in the luxury space |
| Coupe | Typically the sportiest of all body styles, lots of front legroom | Limited cargo space, rear seats range from uncomfortable to unusable, more expensive to insure than sedans |
| Convertible | Same as coupes but with extra sunshine | Expensive, slower/less sporty than equivalent coupes, road noise can be a problem |
Once you have a body style in mind, create a short shopping list and narrow your choices from there.
3. Further narrow your choices by safety, reliability, etc.
Let’s say you’re pretty sure you want a crossover. What are your next priorities? Make a short wishlist of your top three to five features:
- Reliability
- Fuel economy
- Interior quality
- Safety
- Handling
- Performance
- Comfort
- Technology
- Cargo space
- Off-road capability
- Towing capacity
- Looks
- Manual transmission
- Hybrid/EV
Now that you have a budget, a body style and a wishlist, you should be able to put together a short but precise summary of the car you’re looking for. Something like:
- A crossover under $19,000 with good comfort, tech and cargo space
- A coupe under $41,000 with good reliability, performance and handling
- An SUV under $26,000 with good towing capacity, off-road capability and interior quality
This will set you off to the races for more specific research.
4. Start researching and come up with a top 5
With a more precise idea of what you’re looking for, you can now do some targeted and efficient research to come up with a list of five or so vehicles that meet your needs.
New and used car listing sites like Edmunds, Autotrader and Kelley Blue Book let you enter your budget, body style and preferred features and see plenty of matching vehicles for sale nearby. These sites typically include vehicles for sale at nearby dealerships, national used car retailers and even private sellers.
You can also go to the subreddit r/whatcarshouldibuy, enter the description you put together in step 3 and crowdsource ideas from the 300,000-strong (as of publishing) car-loving community there. Or you can Google your preferred body style and “#1” to find a “Top 10” list written by a reputable outlet.
Continue reading, researching and crowdsourcing ideas until you come up with a list of five to 10 options. Here’s a sample list we came up with for a comfy, spacious, tech-laden crossover under $42,000:
- 2017 Lexus RX 350
- 2017 Alfa Romeo Stelvio
- 2017 Mercedes GLC 300
- 2017 Porsche Cayenne
- 2020 Buick Encore
- 2023 Mazda CX-5
- 2023 Hyundai Santa Fe
From here, you can narrow your choices even further by bringing finances back into the equation.
» DO IT RIGHT: How to buy a new car
5. Factor in the true cost to own
There’s an old saying in the BMW community: If you can’t afford it new, you can’t afford it used. In other words, just because you can afford the upfront purchase price of the car doesn’t necessarily mean you can afford the cost of ongoing repairs and maintenance.
To illustrate, if you’re looking for a fun, comfy, tech-filled sedan for under $50,000, you might end up with a 2017 Porsche Panamera and a 2023 Lexus IS 350 on your list. Surprisingly, both cost about the same on the used market.
But when you compare the two using the Edmunds True Cost to Own tool, you’ll see that a 2017 Porsche Panamera can require $6,000+ annually in maintenance and repairs, while a newer IS 350 might call for just $206 in these costs. So, despite costing roughly the same as the Lexus, the Porsche may cost $500 per month more in upkeep alone.
This is why it’s worth taking a few minutes to run each vehicle in your list through three no-cost online resources that can help you predict the cost of upkeep:
Chances are some of the cars end up too pricey to keep — and your list gets shorter.
If you’re still keen on buying a car that you know is unreliable (hello, Alfa Romeo), there are two things you can do:
- Buy a car that’s still within the factory warranty period
- Consider buying an extended warranty
Just keep in mind that most auto warranties, factory or extended, only cover manufacturing defects. They won’t cover damage or failures caused by negligence, abuse, misuse, collisions, weather, preexisting conditions or anything you can’t prove wasn’t a preexisting condition.
For more on extended auto warranties and when to buy one, check out our home base for all extended auto warranty content.
6. Get some insurance quotes
Before we get to the fun part, there’s one last bit of number crunching you’ll want to do. Because, just like the cost of repairs and maintenance, the cost of insurance can vary wildly between makes and models, even if they cost roughly the same.
For example, we collected two online quotes for a hypothetical 28-year-old male with a $30,000 budget: one for a 2016 Lexus IS 350 and one for a 2017 Chevrolet Camaro SS. Despite controlling for every other variable, the provider quoted us $1,700 for the Lexus and $4,400 for the Chevy.
That’s why it’s best to get insurance quotes during the research and budgeting stage. Not only can it heavily influence your choice of vehicle upfront; it can also save you thousands on auto insurance in the years to come.
» CALCULATE: How much is car insurance?
7. Go on test drives
By now you’re probably down to just two to four cars on your list. It’s finally time to put math aside and let your emotions take over.
You can now go on some test drives knowing you can afford to buy these cars, own these cars and insure them. In our experience, that makes going on “dates” with cars much more fun and relaxed.
If you’re looking to buy new, you’ll be test driving at the dealer. Buy used, though, and your options open up to include places like CarMax and local private sellers. Then you can find the perfect car for you. For more on that process, check out our guide for first-time car buyers — and enjoy your new ride.
FAQ
When is the best time of year to buy a car?
The best time of year to buy a car is December, when dealers are trying to move last year’s inventory and meet annual sales goals.
What is a good budget for a car?
As a general rule, up to 35% of your annual pretax income is an ideal budget for a car.
Should I buy an extended warranty?
Extended warranties make the most sense if they cost less than the repairs they’re supposed to cover. To see an estimate of how much your new car will cost to repair each year, check out step 5 above.
» MORE: What does a car warranty cover?
Article sources
- Edmunds, “ Used 2017 Porsche Panamera Cost to Own .” Accessed June 23, 2023.
- Edmunds, “ 2023 Lexus IS 350 Cost to Own .” Accessed June 23, 2023.
