The general principle is that the annual cost of your car versus the annual cost of your house should be proportionate to the amount of time you spend in each.

Take a look:
http://www.befrugal.com/tools/how-much-to-spend-on-a-car/

Fast forward to 2010 and I have zero complaints. It’s runs great, has 73K miles on it, yields about 42MPG (combined), and except for the wipers, tires (which I replaced 3K ago) and headlights I’ve had zero in repair costs. Naturally, I’ve had maintenance costs of about $50/year over the life of the vehicle but even that is pretty unheard of. A lot of it has to do with how I drive.

The irony is that when I bought the car I told myself, “I’ll buy a in six months”, fortunately I never did, and now, ~10 years wiser, I never will :-0.

I know there’s no ‘right’ answer for this but my recommendations are:

Write down your, needs, wants, and would likes. Make sure you’re buying the car YOU want, not the car you feel you have to drive because of external pressure, e.g. family, friends, neighbors, opposite gender, marketing, etc, be mindful of pathos.
Buy used (if you don’t feel comfortable buy ‘certified’)
Negotiate (if you don’t excel in this attribute leverage someone who does, I was at the dealer for 3hrs when I bought my car, 2hrs for my mom’s)
Consider a previous rental vehicle, I know, I know, the stigma is high but give it a chance. I helped a buddy buy a car from Hertz (2007 Hyundai accent, for $9,500 out the door, YES $300 less than mine.) and it’s been great. They even gave him two new replacement tires, a tank of gas and ‘cosmetic touch up paint’ because the car wasn’t ready when he went to pick it up. Also, Hertz seems to have a ‘no pressure’ attitude and ‘what you see on the window is what you pay’, zero haggling. BTW, keep an eye on AAA, they regularly have offers to discount the price by $500 if you’re a AAA member when you buy from Hertz.
Be mindful of upkeep for the car you pick, there’s nothing like 240/45 low profile tires until you realize a set is $1000, and an oil filter is $50.
Call your insurance company to simulate a re-rate, nothing is going dull that shiny new paint on your ‘new’ car like insurance going up 40% a month (not to mention registration.)

All the best in your search.

Disclaimer, I have ZERO affiliation with Hertz, I’m simply someone who was happy with their service/has a friend who owns a previous rental vehicle who is happy.

My solution? I bought a bike. A nice (but used), hand-built bicycle with top-of-the-line parts set me back $1,000. Besides that, I had some extra upfront costs including a helmet, lights, a U-lock and cable lock, spare tubes, etc., and rain and winter gear. All told it set me back perhaps $2,000.

Now I save at least $100-$125 a month on gas, $600/yr on auto insurance, and significantly more when you consider oil changes, tires, maintenance, and financing. Just the first year you more than break even. Every year after that is thousands of dollars in savings.

And that doesn’t even consider the personal health benefits — I’ve lost 35 pounds, without changing a thing. A 7.5 mile commute each way 5 days a week will do that to you. I show up to work energized instead of tired, and I don’t get angry from the stresses of driving any more. It’s been one of the best decisions of my life.

2. Buy a used car but *Never* buy the first year of a new model. There are so many new items in the 1st year of a model that there is bound to be mechanical/ reliability problems. Optimally, the 3rd year(+) of a model run is the sweet spot. Wikipedia has good info on model years.

3. I have noticed that people are more likely to take a lower offer once there loan is paid off. Most car loans are for 5 years. (Remember that model years start selling sometime the year before i.e 2011 cars will go on sale this year).

Protips:
1. Only buy from a private seller.
2. when calling on an ad ask for “The vehicle for sale” not “The 2003 Corolla”. If they ask “which one?” hang up, you have reached a car dealer.
3. Check the VIN on Carfax.
4. ask to see the repair records, at 5 years there probably should have been a timing belt change.

http://www.wisebread.com/the-joy-of-buying-a-new-car-9-car-buying-tips

I like new as it takes longer before the car repairs start and, like Marci, I like to keep cars for a long time. My prior car I had kept it until it started needing monthly repairs and was breaking down on the freeway.

My current car cost $11,000. So, $20,000 is a HUGE number to me. I’ll aim for between $15,000 to $20,000. At $15,000 it will require saving $250 per month and at $20,000 it will require me to save saving $335 per month.

Thanks again for the input.