Setting a budget

Understanding your budget and getting a good price from the dealer is crucial if you don't want the car buying experience to leave a bitter taste in your mouth. Look through our tips to get some pointers on making your cash work for you.

• Set a budget and stick to it, no matter what the dealer or finance company says you can afford.
• Work out how much cash you realistically have to spend after mortgage/rent, tax, bills, entertainment and other outgoings have been considered.
• Besides any repayments on the car itself, you also need to consider other running costs such as fuel bills, insurance premiums and servicing – these will cost you thousands each year. Look at our pence-per-mile/true-cost figure to see how much the car you've got your eye on will cost to run, on top of the loan/finance.
• Consider whether you really need a brand-new car. Depreciation is the biggest cost in owning a car with the biggest drop coming in the first year. If you buy used, even just a one-year-old model, you could save plenty and still have two years of warranty protection left.
• Use the What Car? Target Price to find out the most you should be paying for any new car. There are very few models that you will need to pay the full list price on.
• Use the What Car? Price Guide or online valuations to get the best price for your old car when you trade in, or to make sure you're not paying over the odds for the second-hand model you're after.

Find out more about car showrooms  - how they work, and how to translate the way dealers speak so you need never feel intimidated during the process.