Finance Roll

So, it's time to buy a new car. The automakers will thank you for your patronage. However, before you head off to a dealership, you'll need to consider several factors that will influence your purchase decision. Buying a new car is not like buying a new shirt or a pair of pants. It's hard to return a car if it doesn't fit your wants and needs once purchased. Here are some tips to help you make the soundest possible buying choice.

Define Your Needs - The single largest question that will face you in your automotive quest will be that of fitting your needs. While the new GT-R or the 2010 Camaro may be appealing (who doesn't love pure, brute power?), these may not be the right choices for you. Do you intend to haul the family around with you? Do you have a lengthy commute? The answers to these and other questions will have a huge impact on the vehicle you ultimately purchase.

Remember, purchasing a vehicle that fits your needs will help you maximize your enjoyment and convenience. For instance, if you have a long commute, you may want to consider a hybrid vehicle. These can help you attain substantial savings on fuel. If most of your driving is done on the highway (without the hindrance of rush hour traffic), you can benefit from a wider range of possible choices.

Define Your Budget - Perhaps the most important factor in your purchase decision will be how much you are willing (or able) to spend. While most people would love to simply pick the car they want, without worrying about affordability, this is rarely the case. You'll need to find a vehicle that fits your budget. That means you will have to plan how much you can afford to make in monthly payments. To do this, you'll need to determine just how much surplus money you have each month.

To make an accurate budget, first take out all of your essentials, such as credit card bills, electric bill, mortgage payment, etc. Once those amounts have been removed from your monthly income, deduct the average monthly cost of groceries, estimated fuel consumption and other incidentals.

Now, take out an additional amount for emergency funds. What you are left with is what you can afford to pay for a car each month. If you are currently making a car payment, estimate how much the new car will add to the payment. Remember, if you owe a considerable amount on your current vehicle, the amount will simply be rolled over onto the new loan, increasing your payments.

Financing - Most consumers will have to finance their vehicles. Very few people are able to pay for a car outright at the time of purchase. This means that you will need to research lending companies. You can do this easily online and get an accurate idea of current interest rates, as well as what you can expect your monthly payments to be. You can also use in-house financing at dealerships, though research is still needed prior to your decision to purchase a new vehicle.