There are people who will tell you that buying a car is an investment. They're wrong. There are few big-ticket items that will lose as much real value as a car does, and it starts the second you sign the purchase papers.

Which is not to say buying a car's a bad idea – aside from the convenience of having your own A-to-B wheels, owning your own car might be essential for work. But if you're smart, buying a car will simply mean the lifestyle benefits you get out of it are worth the money you spend each month.

Think of your monthly instalments as a non-refundable living expense, kind of like talk time on your cellphone. Then you'll be able to be more realistic when you plan how much you can spend on a car.

A new car gives you unequalled peace of mind – there's no history of dodgy drivers, chassis-bending accidents or parking scrapes covered up with nail polish.

Your car's also under warranty, so any teething problems will have to be sorted by the dealer, and it probably comes with a maintenance plan, taking the hassle out of maintenance for at least the first few years or 30 000km.

On the down side, a new car loses 20 percent of its value the moment you drive it out of that showroom. Demo models have been driven by other people, sure, but they're unlikely to have experienced serious damage at the hands of a few test drivers.

You get the warranty, most of the maintenance plan and the nearly new model for a significantly lower price. So what if there area few scuff marks on the seats?

'Previously loved' (second-hand) cars used to be a lot cheaper, but the market is much more competitive now, so do your homework. Although a pre-owned car won't depreciate as quickly as a new or demo model, it'll still lose value.

Plus you're buying the car's driving history – second-hand cars are often sold voetstoots, meaning there are no guarantees about the car's condition or performance.

If the car breaks down, you'll have to fork out for the repairs.Before buying, have the vehicle thoroughly checked by an expert.

The AA will conduct thorough mechanical checks of used vehicles on your behalf for a small fee. For a more detailed outline of what to look out for on a used car, visit the Car Today website at www.cartoday.com and click on the section titled 'Buying a Car'.

How much should you spend?
How long is a piece of string? It depends on two things: firstly, how much disposable income you have available; secondly, what kind of features you want from your ride.

Banks and finance companies will usually let you spend up to a maximum of 30% of your personal income (before tax) on your car.

So if you earn R7 000 per month, this would work out to a maximum of R2 100. But that's a very silly idea, unless you plan to only ever own a car – and sleep in it, too.

A good guide is to spend well below your maximum – including everything from your petrol and insurance to the monthly repayments and maintenance costs. That way, you'll have enough money to cover unexpected car expenses and interest rate hikes.

What you're looking for?
Firstly, think about what the following concepts are really worth to you: