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Don’t just pick a “cool” car, name it Sally and drive off without a plan.

Owning a car can change your life.

It makes it a snap to get from point A to point B and gives you the freedom to go where you want, when you want. No more reliance on public transit schedules, or begging friends and family for rides.

But before buying, take the time to do your homework and consider these five steps that may save you from a nasty case of buyer’s remorse:

  1. Budget: How much car can I afford? Resist the urge to pick the coolest car on the lot, because it may not fit within your budget. First, figure out how much you have to put toward the sticker price ― also known as the manufacturer’s suggested retail price (MSRP) — (whether that means paying full price the day you buy or taking out a car loan), as well as if you can afford the upkeep and related expenses (like insurance, gas, repairs, maintenance, parking and yearly registrations). To get started, our How much will my vehicle payments be? calculator may help.
     
  2. Paying for it: Will you take out a loan or pay full price on the spot? Unless you have a shoebox full of cash, a hefty bank account or a generous benefactor, you’re going to have to finance your purchase. And that means taking out a loan. You can finance through a dealer (who actually finances through a bank or other lending institution) or directly with a bank or credit union. In either case, you’ll be presented with an interest rate and a choice of terms, meaning how long you would like to take to pay off the loan.Remember, your credit score will impact your financing, so if you don’t know what your score is ― or you don’t know much about credit scores in general ― do your research. Check out 9 answers to your most pressing credit score conundrums for additional information. If your credit score is low, here are a few tips that may help. Our Compare monthly term length differences of vehicle loans calculator can help you figure out what your monthly payment will be with different loan lengths. Keep in mind that a good rule of thumb is not to let your monthly car payment exceed 20 percent of your net monthly income.
     
  3. Research: What car is best for me? It’s important to look for a car that fits your lifestyle and falls within your price range. Part of this decision is determining if you want to buy a new or used car. While you may not find a gently used car, used cars can be a good way to get all the bells and whistles you want but can’t afford in a brand-new version. If you’re wrestling with this decision, take a look at this article on CNN Money and another great article we found on cars.com that clearly lays out “The Case for Buying New” and “The Case for Buying Used.” Also, check out the best and worst used cars of 2013 from ConsumerReports.org® to find out about everything from consumer ratings to safety factors.Once you’ve thought this through, stop by a few car dealerships. Make a list of your favorite cars, and then narrow it down to your top choice. Here’s a list of questions from MSN Autos you should ask as you do your research.
     
  4. Test-drive it: Is it a good fit? Once you find a car you think you’d like, go to the dealership and ask to take a test drive. Know that the salesperson will probably go along with you (they don’t want you taking it for a joyride!). Bring a friend or family member along so you can get a second opinion from someone who may not be as dazzled by the glitzy features. Are you comfortable in the driver’s seat — and is your passenger comfortable in the back? Do you like how the car handles? How does the radio sound? Is there enough storage or carrying space? If you buy it, you’ll probably spend a good deal of time in it, so make sure it fits you and your needs.If you’re buying a used car, obtain the vehicle identification number (better known as VIN) to get the car’s history. You want to be aware of any past damage, accidents or maintenance issues, and you want to make sure the car is safe ― for more on vehicle safety, check out this link from the National Highway Traffic Safety Administration. You can purchase a car history report from several websites or you can get free reports from VehicleHistory.gov and the National Insurance Crime Bureau. Also get a second opinion by hiring a professional mechanic you trust ― you can always ask a friend or family member to recommend a mechanic they’ve worked with. The test drive gives you the feel of the car, but a mechanic can tell you how and if the car is working properly. Even if the car history report is clean, it doesn’t guarantee the car is problem-free.
     
  5. Make the deal: Are you ready to sign on the dotted line? You’re there. You’ve decided which car you want and it’s time to discuss price — and there’s often a little room to negotiate. If you’re wondering what you should pay, check out the Used car buying guide from ConsumerReports.org. U.S. News & World Report also offers a Car Comparison tool to help you out.Find a reasonable price range you’re comfortable using in your talks with your dealer. You can haggle for a lower price, and some dealers will give an inch here and there. But decide in advance how much you’re willing to pay, and if you can’t get there, remember, there are other dealers and other cars.

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