You may have already imagined yourself behind the wheel of the brand new car of your dreams that you saw on TV or in a magazine. While it’s fun to dream, you don’t want to get yourself in over your head by purchasing a car that exceeds your budget. You want to buy a nice car, but you should also stay within your budget. You don’t want to end up having to take back your car because you can’t meet your monthly payments. When deciding whether you can afford the new car of your choice, make sure to take all emotion out of the decision.

Most people can find a low-interest loan for a new car. Keep in mind that in the long run, the more you finance, the more the car will cost you in interest. If this occurs, the price you negotiated with the dealer will be lost over the term of the loan. Here are some things to consider when buying a new car:

  • Make sure you can make a decent down payment on the car. Some experts recommend 20 percent.
  • Consumer Reports is a well-respected advocacy group that recommends your payments are no more than 36 percent of your monthly budget. If your income is $100,000 a year, your debt should not exceed more than $36,000. This includes your mortgage, credit cards and other loans.
  • Check other online resources for online tips and calculators. These allow you to input various debt scenarios to help you determine a budget for a new car. You can search for these resources by using terms such as find new car, new car prices or new car search.
  • When car shopping, ask the sales rep if a car comes with a warranty. Depending on the type of warranty offered, you may want to purchase an extended warranty which might add to your expenses but will protect your investment.

Always remember that these figures should be clear before you go shopping. Don’t automatically assume a dealer will keep your best interests in mind when it comes to financing. This is your responsibility.