Before You Shop

Before you shop for a new car you'll probably want to take a look at your finances. I'm assuming here that you will be financing at least part of your purchase. (If not, see the paying cash section later.)

Let your budget help guide your decision on which car you buy. It makes more sense than picking a car and then forcing it into your budget. After you figure out what you can spend each month you need to think about how much you can use as a down payment.

Just a quick note here. These days it has become commonplace not to make a down payment. People are used to no money down or just trading-in. Unless you own your trade-in outright or have significant equity in it, you'll want to use at least some cash as a down payment. Any amount is better than nothing. As we will see later, borrowing money is very expensive. Down payments will lower your monthly payments, save you money on interest and can sometimes earn you better rates on the money that you do borrow.

You should end up with a good idea of what you can afford for monthly payments and down payment. Use the calculator below to help you out.

Table of Contents
First Things First
Before You Buy
Your Trade In
Buy or Lease
Shopping
Dealers' Cost
Negotiating the Deal
After You Buy
Warranties
Appendix