Start by deciding how much money you can comfortably afford to spend. Don't push your spending. There are a lot of hidden costs and extras that drive a final price up. These can easily add up to more than 10% of the purchase price, so give yourself some breathing room.

There are several different ways to look at price. For some people, it's the total cost that's important. For others, it's the monthly payment. If you're more concerned about the monthly payment amount than the total cost, be sure to figure in the other fixed monthly costs that will change, such as insurance, maintenance and repairs.

Once you've decided on your price range, you should consider whether a new or used car makes more sense for you, given your budget, your needs and your preferences.