How Much Car Can You Afford?

Down payment saved (at least 20%)

A larger down payment reduces your loan amount and monthly payment

Car payment under 15% of monthly take-home pay

Financial experts recommend keeping total car costs under 15-20% of take-home pay

Gotten insurance quotes for the target car

Insurance can vary significantly by car model — get quotes before buying

Emergency fund in place (3-6 months expenses)

Don't drain your emergency fund for a car down payment

Credit score checked (700+ for best rates)

Higher credit scores qualify for lower interest rates, saving thousands over the loan

Calculated total cost of ownership

Include gas, insurance, maintenance, registration, and depreciation — not just the payment

Pre-approved for a car loan

Dealer financing is often more expensive than bank or credit union loans

Distinguished needs from wants in a vehicle

Separate must-have features from nice-to-haves to stay within budget

Compared at least 3 models in your budget

Test drive multiple options — the first car you like isn't always the best deal

Planned for pre-purchase inspection (if used)

A mechanic's inspection costs $100-200 but can save thousands in hidden problems

Researched trade-in value of current car

Know your current car's value before negotiating — use Kelley Blue Book or Edmunds

Prepared negotiation strategy

Research invoice price, be willing to walk away, and negotiate the total price — not monthly payment