How to Determine How Much to Pay for a New Car

Whether you're concerned about your budget or just don't want to pay too much for a particular new car payment, several Internet tools can help you to make the most affordable decision. Before setting out to look at cars, you should consider your monthly budget and stick to it. You should also negotiate a vehicle's price accordingly. Learn how stick to your price range and to lower the price on the new car you choose.

Instructions

Budgeting

1

Go through your monthly bills. Take your monthly income after taxes and subtract your monthly bills to determine how much spending money you have left over.

2

Call your insurance company to find out how much you can expect to pay for a full coverage policy on a new car. Full coverage insurance is the most expensive you can buy and should be included in your monthly car payment budget.

3

Subtract your car insurance amount from the amount left over after bills. Decide on a comfortable payment that fits into your budget. Use an auto loan calculator to produce rough figures so that you can shop within your budget.

4

Go to the Edmunds website to access the "how much can I afford" calculator. Enter in your target monthly payment, money you plan to put down and loan term to see your price range. You can leave the default rate alone, if you like, as the rates are based on averages and are not the best you can get -- it is better to assume higher than lower.

Negotiating

5

Shop for cars within your price range. Go to different manufacturer websites to determine new car prices. While you're there, find the current month's incentives, which usually offer several thousand off the car as an incentive to buy, putting more cars in your price range.

6

Go to the Edmunds website again to use the True Market Value tool, which helps you to determine invoice pricing. Enter in all relevant vehicle information to determine the car's invoice price, which you will use for negotiations.

7

Add an amount over the invoice price, such as $700 to $1,000 for fair dealer profit. This is the amount you should pay for your new car before any manufacturer rebates or incentives. Subtract any rebates that you found on the maunfacturer's webpage for your total target price.

8

Go to a dealership and make your offer in person. If the dealer says no, keep shopping. Usually, a variety of same-make new car dealers exist in and around an area, so don't be afraid to contact them.

9

Save time by emailing dealers. You can find dealer contact and email information from the manufacturer's website. State your offer and interest in an immediate purchase if you numbers are met -- email more than one dealer, as one should meet your price because you did fairly figure your pricing in consideration of dealer profit.