This paper presents a new route guidance algorithm and a compact road traffic model that can be easily obtained and transmitted in real-time by individual vehicles while they are travelling on streets or queuing in road cross junctions. The proposed algorithm uses histograms as the network traffic model that captures the arrival rate distribution in VANET. In addition, the paper presents an analysis method that works directly with the histogram model to obtain the queue occupancy distribution at cross-junctions or traffic signals using a finite queue model. A microscopic simulation model is utilized to assess the effectiveness of the traffic model in detecting traffic congestion and directing vehicles to choose better paths. Results show that the proposed road traffic model provides a good prediction of road traffic status, and can be used in conjunction with any standard shortest path algorithms to provide an efficient mechanism for selecting fastest road path.