Car Buying: Four Steps to a Bargain on Wheels

America is car obsessed. We love our vehicles -- at last count, America has over 200 million passenger cars and light trucks on the road, according the U.S. Transportation Department. Many high school and college graduates will dream of a new car this summer. And many will go out and buy one.

These auto shoppers should make sure they buy a car the smart way. Pay too much for a car, or spend too much of your paycheck on car payments, and you could easily end up car-rich and cash-poor.

New cars depreciate by 25 percent in the first year, according to Bank Rate Monitor. That means a $20,000 car costs you $5,000 in depreciation during year one. If you finance the car for six years at the currently typical interest rate of 6.69%, that car will cost you about $6,900 in depreciation and interest alone in the first year, not including the car payments. That's not including fuel, maintenance, and insurance!