This is the fifth installment of The New Driver Series. In the last article, I provided an ad-free list of items you might need for your first car. For this article, I’m working my way backwards to talk about what you should look for in a first car. As I mentioned in the last article, the mechanic I hired said I was the most prepared car-buyer he ever met.

I knew precisely what I wanted and what my compromises were. By sticking to that checklist, I had to walk away from my dream first car to choose one that much better suited my lifestyle, budget, and needs. It was a difficult decision to make, but a year later, I’m glad I purchased the car I did.

Here are the five considerations that may help to make your first car a mechanically and financially responsible purchase. Note that I did not buy a jalopy and cannot give advice where those are concerned.

1. Design & Dimensions

I did my driver’s ed classes in Jamaica, where I drove old ’98 compact SUVs. One was a Suzuki Samurai and the other was a Suzuki Vitara. The only car-sized vehicles I drove were hatchbacks because the design was just a micro-translation. While I think sedans are beautiful cars, you couldn’t give me one for free.

When re-learning to drive in America, I drove my Dad’s Nissan Altima, which feels like a spaceship to me. So, I had dimensions as well. I absolutely refused to purchase a vehicle that was much longer than 162 inches.

My car is exactly this length. That makes it easy to parallel park and I can swing it into tiny spaces in the city. I now have to parellel park at home every day, so I’m glad I considered that or it would have been problematic.

Define your preferences as accurately as possible. Having a shortlist helps to ensure you feel less overwhelmed by all the available choices.

2. Monthly Car Note

Another consideration that helps you to narrow down your options is how much you can afford to pay each month. If you buy your car in cash, then you won’t need to worry about a monthly car note. For those of us who finance a car, this is something we need to keep up with for five or so years.

I like to ask people to guess my car note. The first thing they ask me for is the year and then a picture. Answers range from mid-$200s to high-$300s. My car cost almost $10,000, but my car note is only $153.64 per month. Not surprisingly, I have already paid off more than 40% of its cost.

Monthly Affordability

When you decide to purchase a car, decide how much money you can afford to spend each month on a vehicle — period. Then, subtract the insurance quote you received, followed by an estimate for gas, and car maintenance. Whatever you have left is how much you can afford to spend each month on a car note. Stick to this budget range.

Loan Term

To keep you within budget, many car dealerships and banks will talk you into extending your loan term to six or seven years. Don’t fall for this. Have you ever heard of an underwater mortgage? This is when a house values way less than the balance the owner needs to repay.

Cars depreciate at an alarming rate. Add compounding interest for six or seven years and you will owe way more than your car is worth. Five years should be your cut-off point.

Interest Rate

Another benefit of choosing a shorter term is lower interest. I could have chosen four years, but decided to stick with five after realising the interest rate Capital One charged me was the same. Had I chosen three years or less, the interest rate would have been even lower. Note that the interest rate may differ per car as some lenders evaluate risk based on the specific vehicle.

So, what can you do to get your monthly payment as low as mine on a $10,000 car? You need to have a good credit history. My interest rate is 6% because my credit score is good, but new (I’m an immigrant). I have a friend who has am interest rate of 2% through her credit union in New York.

Down Payment

Next, you need to make a good down payment. My minimum down payment was roughly $500 to $1,000 if memory serves. I put down $2,000 instead. Note that your down payment will also affect your interest rate. My cut-off point was $2,000 because after that, my interest rate didn’t change much.

3. Overal Reliability

I’ve been warned against purchasing American cars for as long as I’ve been able to retain any knowledge related to cars. Jamaicans have warned me against them, as have Americans. The only exception is Jeep, which I do love, but which is ridiculously overpriced.

A Chicago Tribune article published after I bought my car echoed what I have always heard: Asian brands are the most reliable. Of course, European brands do well too, but for a first car, you are unlikely to purchase an Audi. Still, here is the list provided which is what I saw at the time I bought my car:

1. Lexus
2. Toyota
3. Mazda
4. Subaru
5. Kia
6. Infiniti
7. Audi
8. BMW
9. Mini
10. Hyundai

Still, not all Asian brands are good brands. When I first started car-hunting, I was deadset on getting the polarising Nissan Juke. All four of the ones I checked out were cheaper than the car I ended up buying. However, they had transmission issues. After the last one failed to pass my mechanic’s test, he told me to take a few days off and reconsider.

He advised me to steer clear of Nissan because they were notorious for transmission problems. Other specific cars he advised against included Ford and Chevy. He suggested a Kia. I bought a Hyundai, which is the company that owns Kia. Months later, my Dad’s Nissan Altima transmission went out for the second time.

NOTE: The older the car you purchase is and the more miles on the dash, the more you should stick to reliable brands. Many people don’t factor the cost of maintenance into car ownership. Always ensure that you do.

4. Fuel Efficiency

I mentioned earlier that I wanted a Jeep, but got turned off by the price tag. However, there was more to my decision against the two-door Jeep Wranglers I wanted so bad. There was no way in hell I was going to accept teens and early 20s for my MPG.

In fact, one of the first cars I found within my price range was a cherry-red Subaru Impreza hatchback in great shape. Then, I saw the 25 MPG and quickly removed it from my queue. I knew the MPG for all my friends’ and family members’ cars and decided early on what was acceptable for me. I wasn’t willing to accept lower than high-20s and ideally wanted to be in the 30s.

My Hyundai Accent comes with a “sticker MPG” of 27 MPG in the city and 38 MPG on the highway. I live in the suburbs, so most of my driving includes wasting gas sitting at stop lights and stop signs. I only get on the highway once per week to go into the city. Even so, my car’s MPG has gone as high 37. I average around the lower 30s. It also has an ECO mode, but I don’t use it.

If you pick a car model with great fuel efficiency, note that there are a few upgrades that could lower this. Turbo, all-wheel drive, and four-wheel drive will eat away at your gas money. Many new drivers also focus on how much it takes to fill up their tank. Note that the size of your tank and the type of fuel your car requires determines this, not your fuel effiency.

The most fuel-efficient cars are hybrids and electric cars. However, these cars still rely on fossil fuels to charge them, so consider the pros and cons if green living is your motivation.

5. Insurance Cost

As a first-time car owner, your car insurance will be higher than most people’s. The odds of this increase if your driver’s license is new and if you have never been covered under anyone else’s insurance plan before. Another important factor affecting your insurance cost is the car you choose.

When getting an insurance quote online, the website will ask you to enter your vehicle’s information. Every insurance company calculates the risk on a car-basis differently. In general, however, any car that appeals to a younger male demographic will have higher insurance costs, particularly coupes and turbo-charged vehicles.

By the time I got to insurance considerations, I had narrowed my options down to three cars. The Veloster, which I loved, had the highest insurance cost because it was a coupe and came with turbo. All Jukes also come with turbo boost, so this was next in line. My Hyundai Accent is a four-door and has no turbo boost. It had the cheapest insurance quote.

NOTE: When you finance a car, the insurance premium will be higher because virtually all lenders require full coverage. Even if you own your car outright, if your car has a good market value, consider keeping full coverage to cover vandalism, theft, natural disasters, and totalling the vehicle. Liability-only insurance does not cover any of this. It only pays for damage to another person’s property and person.

For more information on how to keep your insurance costs low, check out part one of The New Driver Series:

HOW I LOWERED MY INSURANCE PREMIUM BY 30% AFTER PURCHASING MY FIRST CAR ON A BRAND-NEW LICENSE

There are many other things you may wish to consider when purchasing a car. Maybe you prefer push-start or insist on having cruise control, and high-end safety tech. You should absolutely get these features if you can. However, these are far less important than the specifics highlighted above. If you’re an experienced driver, feel free to leave other essential considerations in the comments below. 

For the next installment of The New Driver Series, I’ll go into more details of how I paid off more than 40% of my car’s price tag in just a year.