By Roslyn Lash
Learn more about Roslyn on NerdWallet’s Ask an Advisor.
It’s easy to spend more than you planned when buying a car. The nicer, more expensive cars are generally parked prominently on the showroom floor, while the average, more affordable cars are less visible. Once you see those shiny cars, it’s easy to become so excited that you forget your budget.
But spending too much on a car creates unnecessary financial stress. Despite the flashy rides and too-good-to-be-true deals you may see, there are a few steps you can take to stay in your financial lane when buying a car.
Set a budget
To manage your finances properly and prevent buyer’s remorse, prepare a monthly budget to determine how much you can comfortably afford for a car. Deduct your monthly expenses, including the amount you’ve allotted for savings, from your monthly take-home income. You can use the remaining amount for your car payment, insurance and car expenses.
Do your research
Before you go to a dealership, research what car you want to buy. There are many online resources for car buying, including Edmunds and Kelley Blue Book, where you can check out performance reviews, car values and more. If you visit the dealership without doing your homework, you may pay more for a car because you’ll be unfamiliar with its true value and any consumer complaints that could influence your selection or help you negotiate a good price.
Get preapproved for a loan
Monthly payments are determined not only by the cost of the car but also by the interest rate on the loan. A lower interest rate means a lower monthly payment. To save as much money as possible, compare the interest rates offered by your bank or credit union and other car loan providers to get the most reasonable rate. Get preapproved for the amount you can afford before you visit the dealership to negotiate the purchase. Remember, when determining the monthly amount you can afford, give yourself some padding for car insurance and other expenses.
Get a vehicle report
Viewing a used car’s vehicle history report can help strengthen your bargaining position or ensure that the car is in good shape. You can see if the service records correlate with the car’s mileage records or if there are any problems you may not have been aware of. Knowing the history of a car may also help you avoid spending money on future repairs. In order to obtain the report, you will need the car’s vehicle identification number. The VIN may be listed in online advertisements, or you can contact the dealer directly. Many dealerships will provide these reports for free if you ask. If you’re buying a used car from a private party, you can purchase a vehicle history report from CarFax or AutoCheck.
Get an inspection
If you’re buying a used car, have it inspected by an independent mechanic. The inspection should cost less than $100. That’s a small amount to pay for the peace of mind of knowing the car is reliable. If you discover a problem, you can ask the dealer to make the repair or negotiate a lower price. Both options will reduce your overall cost. If possible, get a complimentary warranty of at least 30 days, which offers some protection if the car has problems right after you buy it.
Be a smart negotiator
If you don’t have approved financing, never tell the salesperson the monthly payment amount you can afford. If you divulge this information, the dealership will simply adjust the terms or length of the financing arrangement to fit that payment amount. Your payments may still be within your budget, but overall you may be paying much more because you’d be paying for a longer period. Instead, you should negotiate directly on the cost of the car. Before agreeing to the deal, ask for the total price, along with a breakdown of the taxes and fees. This is known as the “out the door” cost.
Be prepared to walk away
When you’re negotiating the cost, if you can’t come to an agreement, leave the dealership. You’re the one who will be responsible for those payments, not the salesperson. So save yourself some money, reduce the frustration of haggling, leave and take your money with you. There are other cars and money to be saved at other dealerships.
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This story originally appeared on NerdWallet.