Buying a car is now a major life decision

With tariffs raising sticker prices, buyers should carefully consider their options

By Mark Huffman of ConsumerAffairs

May 5, 2025

• Car ownership now averages 13 years, making choosing the right vehicle a major life decision.

• Mercury Insurance advises shoppers to be realistic, factoring in total cost of ownership, not just the sticker price.

• Key rules like the 20/4/10 guideline help ensure buyers dont overextend themselves financially.

With car ownership in the U.S. stretching to an all-time high of nearly 13 years, the process of purchasing a vehicle has become more than just a transactionit’s a significant life event. Thats why its important to consider what your needs are.

Will the car be used primarily for commuting, family transport, or outdoor adventures? Is fuel economy a top priority? Shoppers should also determine whether a gas-powered, hybrid, or electric vehicle best suits their lifestyle.

“Many consumers tend to buy more car than they need, which is both wasteful and costly,” Justin Yoshizawa, director of Product Management at Mercury Insurance, said in a press release. “Bigger does not always mean better.”

He adds that calculating the total cost of ownershipincluding insurance, maintenance, and fuelcan help consumers avoid unpleasant financial surprises.

The 20/4/10 rule

Financial advisers urge carbuyers to keep car payments at a reasonable level by following the 20/4/10 rule, which is:

• 20% down payment on the vehicle.

• 4-year repayment term to avoid excessive interest.

• 10% or less of monthly income dedicated to total transportation costs.

Adhering to these guidelines can keep car buyers from getting in over their heads, especially in an era where vehicle prices continue to rise.

Extra caution with used cars

When buying used, the stakes are even higher. Mercury advises conducting a detailed inspection:

• Exterior and interior condition: Check for rust, dents, and wear.

• Engine and undercarriage: Look for leaks or worn components.

• Test drive: Bring along everyday items like child seats or gear to ensure the vehicle fits your lifestyle.

• Professional inspection: Hiring a mechanic for a pre-purchase check can save thousands later.

Buyers should also dig into the vehicle’s history using services like Carfax to uncover past accidents or maintenance records. A clean, well-documented service history is often a green flag.

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