Buying a car, whether new or used, means making a lot of decisions. Will you buy an SUV or a sedan? Electric or gas? What brand and model? What safety features or creature comforts? How about the color?

Governing many of these decisions is cost. Knowing what kind of budget you have—before you go car shopping—can help you handle expectations, make good decisions and get a better deal.

So, how do you decide how much car you can afford? Take these three steps.

Get Pre-Qualified for Financing

Getting pre-qualified for auto financing will give you a great deal of information, all in one relatively uncomplicated step. You simply fill out an online form and a lender will tell you how much you may be able to borrow and what terms you could qualify for based on your income, your credit history and other factors.

Because most people are financing their auto purchase, as opposed to paying cash for their car, these numbers will be a major factor in how much car you can afford. They will help determine how much money you should put down, the size of your monthly payment and other critical pieces of information.

You can get pre-qualified with Credit Acceptance right now and get your process started. It only takes a few minutes.

Create a Personal Budget

The next step is to draft a personal budget, which will help you determine how much money you might be able to spend on a car purchase, including the down payment, monthly payments and related expenses, such as insurance and fuel.

The process is relatively easy. Start by listing your take-home pay from your job as well as any other sources (for example, if you drive for Uber or sell things on eBay, add in that income). Calculate the number for the month and for the year.

Then, add up your expenses, again for the month and the year. This includes the easy numbers, such as your rent or mortgage, loans, credit card payments, phones and other bills. It also includes harder numbers, such as out-of-pocket expenses incurred when you buy a coffee, go out to lunch or purchase groceries.

Take the time to be thorough and accurate. You want a realistic picture of how much you make and how much you spend. When you subtract your expenses from your income, you’ll have some idea of how much money you have left to spend on a car.

Don’t be surprised if you have to make some adjustments to make that purchase. Many people must trim their expenses to buy a car. The good news is that there are often many things you can do to lower your expenses, such as cutting back on restaurant meals and eliminating unnecessary subscriptions.

Understand the Market

Understanding how much car you can afford also means knowing what vehicles cost. And that means doing research.

You probably have some idea of what kind of car you need. A commuter might be looking for an economical sedan. A person with a family might want an SUV. But there are many choices to be made thereafter.

One big choice, for example, is whether to buy a new car and minimize vehicle maintenance in coming years or to buy a used car and perhaps get features that would be expensive on a new car.

Understanding what you need, what it costs and what options are available is a key part of determining what vehicle you may be able to buy. A few nights of online research will greatly increase your knowledge. Doing this research before you go car shopping will arm you with the information you need to make the decisions right for you. It will also ensure that you are treated like an informed consumer.

Want to get started right away? Just fill out the online form to get pre-qualified with Credit Acceptance and learn more about our auto financing options.