You should figure out how much you can afford to pay for a car –and how you'll pay for it –before you ever start shopping for new wheels. Don’t forget to factor in insurance, gas and maintenance costs when figuring out how a car payment will fit into your budget.

If you plan to take out a loan to pay for a car:

• Check your credit reports for free at annualcreditreport.com to make sure your information is right. Lenders check credit reports when they decide how much to charge you for a loan, and errors can cause you to pay more.
• Use an online car loan calculator to see estimated monthly payments based on a car’s cost, the down payment and interest rate. Negotiating on a car's total cost --rather than monthly payments –will help you get the best deal.
• Although dealers offer financing, you might find a better deal on your own, by shopping at a bank or credit union. Compare the APR (the annual interest rate) and make sure you understand how the interest rate might change if you make a mistake, such as making a payment late.
• Always negotiate the car’s price based on the TOTAL cost of the car, not on the monthly payment.
• If you plan to trade in a car you're still paying on, read this important information on deceptive trade-in tricks that can cost you money.
• If you're buying a used car, check Consumer Affairs' Shopping for a Used Car advice.
• Make sure to read and understand all loan and the car sale documents before you sign. If you aren’t sure about something, ask. Or take the unsigned papers home so someone you trust can review it before you sign.