Unless you're paying cash for your car, you'll need to think about financing your purchase or lease. How much can you really afford to allocate toward a car payment each month? The general rule is no more than 20 percent of your monthly take-home pay.
Edmunds has some great tools to help demystify pricing and let you figure out what car you can afford. When searching for a car on Edmunds.com (by year, make and model), look for Price Promise offers to get an up-front, guaranteed price on a specific car. To see how the price compares to what others are paying for that car, check Edmunds True Market Value (TMV®). Finally, estimate your monthly payment on the car with the Edmunds Car Affordability Calculator.
by Philip Reed, Senior Consumer Advice Editor at edmunds.com