The first thing you want to know is what you want to buy BEFORE you ever go out shopping! Let me make this very clear. Car dealer's jobs are to sell you a car on your very first visit. A salesman/woman and their sales manager believe that if you walk into their dealership and do not leave with a car, you will never come back again. They are going to hammer on you until they either A) Make you mad and you get up and leave or B) Sell you a car. It's the nature of the beast. Know it and accept it ahead of time.

What do you want to buy? Where can you get unbiased information on the auto? http://www.kbb.com and http://www.nadaguides will fetch you cost, warranty repairs, recalls,rebates and information on problems and tons of other related info beforehand.

Limit your shopping to three models. Keep it simple. Those will be the ones that you will shop for. More than three models is too time consuming and complicates your car-buying experience. Keep it simple.

Can you afford the car? You may think you can afford the car, but the bank may think otherwise! I have seen this so many times in my career.

Let me explain automobile economics 101: Take your gross monthly income (what you make per month BEFORE Uncle Sam taxes you) and remember, this income needs to be verifiable with provable-tax returns, check stubs

with taxes taken out or a W-2. If you are self-employed, you will need two years of tax returns with Schedule C's. The schedule C is the income that you actually paid taxes on. Being self-employed can be

tough. You may need to combine a spouse's income if you are self-employed.

Now with your gross monthly income figured out, tally up what all of your debts are that you have going out each month. Include everything'it?s listed on your credit bureau's.

Example: Car note=$450.00 + House note= $560.00 + Credit card debt= $425.00 + Boat note= $310.00 + Charge-offs=$1200.00 (yes, charge-offs; these are

bills that you never paid and they were written off). Add all of your debts up. With just your obvious debts (including the charge-offs), you have $1805.00 per month going out. I arrived at that figure by adding

up all the monthly notes and taking 5% of the charge-offs. 5% of $1200.00 = $60.00.

We're not through, though. Now we have to figure in

your cost of living=utilities. Each lender has their own algorithm for utilities but a good range to estimate would be to add $300.00. Now we have a total outgo of $2105.00. Next, add your car insurance payment. For this example, let's use $100.00 per month. This is what you have to have to pay your current bills before you take on any other debt.

Almost all lenders will not allow your new car note to exceed 20% of your gross monthly income. For our example, let's assume that your gross income is $5300.00 per month. To make it easy, take $2205.00 and double it. That would be $4410.00. That would leave you with disposable income of $990.00.

What the lender is looking at here is referred to as 'debt-to-income'.They want to know if you have more going out than you can handle. This is strictly a case of numbers and provable numbers.

If your gross income was $4500.00 and you had $2105.00 in debts each month, you need to be prepared for one of two things; (1)add your spouse's income and your spouse to the deal or (2)trade in the other open auto. If your debt-to-income is running too close to 50%, you're

going to have a hard time getting a loan for anything. Make sense? The way the bank looks at it is like this: you can't afford both cars so they assume that you are going to let the other (older) car go back to the lender=repossession. That's their take. Debt-to-income is a HUGE deal.

In this case, your disposable leftover income is $990.00. 20% of your gross ($5300.00) would be $1060.00. Whoa! Let me be the first to inform you that you are NOT getting a car payment of $1060.00! Why? Well, you only have $990.00 left over for starters. Let's be realistic here.

Most lenders will slice that in half which will equal $495.00. Your payment call should be around that figure, give or take a few dollars.

How expensive of a car can you buy on a $495.00 payment? Good question and one that you absolutely need to know so that you can pick out the correct car. One answer depends on the term of the loan. You can

finance for 36, 48, 60 or 72 months, as a for-instance. That equates to 3 years, 4 years, 5 years and 6 years.

I will tell you this: the worst thing you can do is extend the note out the longest amount of time in

order to get the payment where you can afford it. That creates a syndrome that now affects over 75% of car owners called being ?Upside Down.? It means that you owe more on your car than it's worth. It also means that you need more money down when you go to trade it in. The only way around that is a lot of money down or a short-term loan. If you will buy what you can afford and finance for the shortest term possible, you will be in a much better position to trade sooner.

You can again do a Google search for a ?car loan calculator?. You will then punch in the loan amount you want to borrow, the term (48,60, etc.) and the interest rate. If you have not gotten approved already and know

what your interest rate is, you will have to guesstimate.

Here's a rule of thumb for you-it's not an exact science without knowing your credit, but it is a guide you can follow to get you close.

Let's base the rate on your beacon score: that's what the lenders are going to look at.

If your beacon (credit score) is in the 400 or lower range, you will need to figure your interest rate on a new car at 21% (state maximums differ-it could be 18%). If you are looking at a used car, figure on 33%.

If your beacon score is in the low 500 range, figure your new car loan as you would for the above-mentioned 400 beacon.

If your beacon score is in the mid to high 500-range, figure a new car at 18% and a used car at 27%.

If you have a beacon of 600 to 649, figure a new car

at 16% and a used car at 20%.

If you have a beacon score of 650 to 699, figure a new car rate at 12% and a used car rate at 16%. I may be

hitting too high on a few of these, but I live in a state that has the highest rates in the nation. Better safe than sorry.

With the car loan calculator, you will basically be backing into the payment. Punch in an amount that you believe you will be financing and then adjust to get it to the payment of $495.00.

In my next article, I will take you by the hand and personally walk you through the steps to get pre-approved online and get the check, negotiating, how to narrow down your three cars in a hurry, what NOT to

say or do at the dealership, what to demand before you sign and what to expect once you go into the finance office to sign.