To decide how much you can afford to spend on a car, consider two factors -- down payment and monthly payment.
For a down payment, determine if you can afford to pay part of the price of the car upfront. If you have a car to trade in or sell, check the Kelley Blue Book to find its value.
If you'll need to borrow money for part or all of the purchase, tally the amount of debt you currently carry. Your total debt should be no more than 36 percent of your gross income, according to Consumer Reports. Calculate 36 percent of your gross monthly income and subtract monthly bills, any loan payments, and mortgage and credit card payments. The resulting figure is how much you can afford for a monthly car payment.
Online calculators can help you play out monthly payment scenarios.
Besides the actual ticket price, take into account costs such as insurance, Fix says. If you buy a car that's newer than the one you're driving, the premiums will rise.
Once you've set a price range, go online to find cars that fit within those limits. Use websites such as Edmunds.com, AutoTrader.com and CarZen.com.