Figure Out Your Budget

So that old hooptie you inherited from your older brother has finally seen the big red stop sign at the end of the road. The first thing you need to do is assess your funds. How much do you have to spend now on a car, and how much can you afford to spend on a monthly basis. 

If your credit rating is hovering around 12, don't even think of financing anything, just see how much you can scrape together. If you do have a decent credit score and a monthly payment won't break the bank, find out how much you can afford to pay per month, and then approach a bank to see how large of a loan that gets you. Don't pick an arbitrary number and then find out what the monthly payment will be; that will only cause you pain, and missed utility payments. 

Remember though, interest hurts. If you get a five year loan with a decent 3.99 APR for five grand, you'll pay around $5,523.60 for it. If you do decide to finance, remember that you wallet will be doing much better in the long run if you can pay more than the minimum payment every month. The sooner you get that loan paid off the less you've simply given to the bank for the privilege of having some money now.