When it’s time to buy a new or used car, the countless decisions can be overwhelming. Whether it’s new vs. used, brands, models, mileage, etc., each choice must be made with a realistic budget in mind. Most people will finance their new or used car, even if they have been saving for one. Here are some good things Trent at The Simple Dollar recommends you do when purchasing your next car:

1. Review your credit report: This summary is from AnnualCreditReport.com’s website: “Annualcreditreport.com is a centralized service for consumers to request free annual credit reports. It was created by the three nationwide consumer credit reporting companies – Equifax, Experian and TransUnion.” Reviewing your credit report will save you from any surprises at the dealership as well as giving you the opportunity to clean up your debts, improve your score, and know whether to expect a low interest rate or a high interest rate.
2. Determine what you would like to purchase: Research consumer and professional reviews of the best makes and models of the type of vehicle you’re looking for. Also, determine the true value of the vehicles you have in mind. Be very specific in what you’re looking for, so you won’t easily stray to something outside your budget. A rough estimate of a car’s depreciation is that all cars fall 20% in value each year, and brand new cars depreciate an extra 20% as soon as you drive them off the lot. Again, this may not be the most accurate estimate, but it will give you a rough idea of price as you’re walking on the lot. Also refer to the book value of the vehicles you are considering.
3. Figure out how much down payment you need: If your credit is less-than-perfect, you’ll need the biggest down payment you can make to avoid high interest rates on large amounts of remaining balances. If you are buying new, you should put 20% down because once you drive the car off the lot, it’s depreciated about that much. On a used car, the depreciation is not as drastic, and a 10% down payment is acceptable.
4. Make sure you get the best interest rate: Stop by your local credit union (KeyPoint FCU serves East Baton Rouge and the 4-parish area with 5 branches) to see what rate they’d be willing to offer you based upon your, research, your planned down payment, and your credit score. If the rate is too high, keep saving for a larger down payment!

For more information about this topic, read Trent’s more extensive entry at The Simple Dollar.