Impulse buying doesn’t always work out as planned. That’s particularly true when someone is looking to make a major purchase like a home or a car. If you are contemplating buying a new car, you must be feeling a little excited about the prospect of having that new beautiful vehicle to drive around. Of course, this is not something you want to do on impulse.

As you start looking around for your next new car, you should also be thinking about where and how you are going to finance such a purchase. Assuming this is a debt you are going to carry around for 4 to 5 years, you want to make sure you are financially ready to take on the burden of a new car and car loan.

The following is a list of 7 things you should do before approaching a lender.

1. Prepare a Personal Budget

– Before you can ensure you are going to be able to handle a new car payment, you’ll need a general idea about your current financial standing. This will require that you put together a written monthly budget that covers the next couple of years. Your personal budget should include all of your income sources minus all the expenses you expect to incur in the coming months. Your expenses should include the necessities (rent, food, utilities, insurance, and projected car expenses with loan), a savings amount and the discretionary money you want to set aside for entertainment. If you lay out everything while being realistic, you should get a clear idea of whether or not you can actually afford a new car.2. Check Your Credit Score

– Lenders don’t lend money to just anyone. The decisions they make at places like are based largely on the borrower’s employment and credit history. If you are not in the habit of checking your credit score, this is the time to do so. If your rating comes back good or higher, you should have no problem qualifying for a car loan.

3. Reduce Your Credit and Clean Up Any Credit Issues

– Now that you have looked at your credit score, this is the perfect time to do what’s necessary to increase it. You can do that by paying off unsecured debt (credit cards) if possible and addressing any problematic marks on comments on your credit report.

4. Secure Funds for a Down Payment

– While you are working on your credit, you should also be working to secure a down payment for your vehicle purchase. In most cases, you can expect to need a 20% down payment amount to qualify for a conventional auto loan. Hopefully, you already have enough savings to cover what you need. If not, caution is warranted. Don’t go trying to borrow money for a down payment unless it’s from a relative that you can afford to repay.

5. Consider Your Vehicle Options

– Armed with your credit score and a down payment, you can start the shopping process. At this time, you should only be focusing on the make/models you want to buy. As you go through the process, you can compare the potential costs with what your budget says you can afford. Temptation be damned, don’t let yourself get caught up in the dream of buying that which you cannot afford. You should shop for the accessories you need and play it conservative.

6. Prepare Personal Documents for Lender

– With a target make/model in mind, you can start gathering documentation. You’ll need a driver’s license, tax returns for two years, bank records, proof of insurance, a social security number and proof of down payment. The dealership will run your credit report.

7. Visit Multiple Dealerships for Best Vehicle Price

– At this point you are almost home. If you have a particular make/model in mind, shop that vehicle by visiting at least three different dealerships if possible. It’s perfectly acceptable to play them against each other until you can secure the best price possible.

If you have followed the 7 steps listed above, you are ready to apply for a loan. Now you are at the mercy of the lender. Good Luck.