How can you figure out what kind of car you need? Here's one way. Take a sheet of paper and draw a vertical line one third of the way from the left. You'll have two columns now, the first half as big as the second. In the first column, list all the kinds of vehicles there are:

  • Compacts or subcompacts.

  • Family sedans or station wagons.

  • Sports cars, coupes, or convertibles.

  • Minivans.

  • Sport utility vehicles.

  • Pickup trucks.

  • Full-size vans or conversion vans.

  • Luxury sedans.

  • Cars that fly and float, or anything else you can think of.

In the right-hand column, jot down answers to the following questions:

  • How many miles per year do you think you'll drive the vehicle?

  • How much time, on average, do you think you'll spend in it each day?

  • What type of driving will you be doing? (What percentage of the time will it be on city roads, highways, off-road?)

  • How much can you afford to spend?

List all of the reasons you want and need the vehicle -- commuting, shuttling kids to activities, camping, antiquing on weekends, and so on.

Now, begin reconciling the two lists and eliminating the vehicle types that don't meet your needs. If you spend a lot of time buying antique furniture, for example, or transporting large animals between zoos, you probably won't want a small sports car with leather seats. If you drive 90% of the time in the city or in heavy, slow traffic, you might not want a gas-guzzler or something that's difficult to park.

Your goal is to get down to one vehicle category. Once you do that, you can begin narrowing the field even further.

To learn about the ins and outs of the car-buying process, check out the Fool's tips on how to buy a car, and ask any questions on our Buying and Maintaining a Car discussion board. And don't forget to get tips on car insurance and other important kinds of insurance, over at our Insurance Center.