Review your monthly budget so you can separate your wants from your needs and choose the most financially appropriate car for you.

It’s easy to forget about your monthly budget when car shopping and, instead, get swept up in the excitement of choosing your new ride. While you’d love to have a shiny, new sports car or a fully loaded SUV with the latest bells and whistles, you might regret such choices if they end up causing you financial stress.

Take these factors into consideration before you go car shopping so you can stay true to your monthly budget, and still drive away with a great car.

1. Review Your Current Financial Situation

Compare your income to your expenses, and make an honest assessment about how much more you can afford to spend.

Are you currently carrying debt? Do you live paycheck to paycheck? If you answered yes to either of those questions, choose a more modest car.

2. Determine Your Maximum Affordable Monthly Payment

Most experts recommend keeping your auto-related expenses below 20 percent of your monthly income, as Consumer Reports notes. But even if your budget can handle a $500 car payment, it doesn’t mean you should go out and spend that much. It’s always better to be a bit more frugal and conservative—that way you have extra funds on hand for unexpected expenses.

3. Consider Out-of-Pocket Costs

Chances are you’ll put a down payment on your car purchase, as well as pay taxes and title fees. It’s a good idea to have money set aside for these expenses. Are you able to trade in your old car? Remember, the more money you can put down, the lower your payments will be, as US News explains, so keep that in mind when considering the effect of a car purchase on your monthly budget.

4. Look Into Your Credit Score

The better interest rate you can get on your auto loan, the less money you will have to pay each month. That’s why it’s important to try to maintain a strong credit score, especially in the months leading up to your auto purchase, as Bankrate explains.

5. Factor in Additional Costs

A new car may mean paying for a new registration, as well as potentially carrying a higher level of insurance coverage, notes CNN. If you’re upgrading to a larger vehicle, expect to pay more for gas as well.

Once you think through these five points, crunch the numbers so you can narrow down your car choices. When you’re in the market for a new vehicle, carefully reviewing your monthly budget will help you separate your wants from your needs, and choose the most financially appropriate car for you.

Dawn Papandrea

About the AuthorDawn Papandrea

With more than 15 years of professional writing and editing experience, my writing specialties are in personal finance, higher education, and content marketing. Publishing credits include Family Circle, Parents,,,, University Business, and many more. In addition, I also create branded content for several brands and corporations in the financial, retail, marketing, and lifestyle/parenting spaces. No matter the medium, I understands the value and power of content from both a writer's and editor's perspective.