If you want to know how to finance a car the smart way, here’s the first step: Buy within your budget. Financing a car while staying away from bad debt isn’t hard at all as long as you make a habit of making one smart decision after another. You don’t just decide to finance wisely and instantly wind up with the car of your dreams and great credit. It has to be a series of good decisions, and here are a few to consider.

Prioritize Price Over Payments

A low price overall is always going to be preferable to lower payments. As long as you can actually afford the monthly payments, the quicker you get through those payments the lower the end cost of your car is going to be. Taking low payments over several decades is a surefire way to wind up paying more than your car is worth in the long run.

Pay Out of Pocket When Possible

Not everyone can do this, but if possible, buying a car with cash is really the best option. If you’re buying a used car, this will obviously be a little easier than saving up five figures before buying a car.

Improve Your Credit, First

If you start out with good credit, chances are you’re going to be paying far less in interest, fees and fines for your car. It’s sort of ironic that the people who can’t afford to keep their credit in good condition are the ones asked to pay more, but there you have it. The better your credit, the less of a risk you’ll be seen as by creditors so the first step to getting great rates is improving your credit. Even if you can’t make your credit spotless, improving it a little here and there isn’t a bad start.

Set Realistic Goals

Many people take out a loan with huge monthly payments because they’re expecting a new job or a promotion that will make those payments easier to cover. You need to take out a loan based on what you’re making now, not what you might be making in six months. Even if you don’t have to make any payments for a year, never borrow what you cannot pay back on your current income.

Explore Alternative Financing Options

You don’t always need to borrow through the dealership or a bank. There are also grants and loans for students, there are special funds for the disabled, minorities and various other people who fit into certain niches. There are rich uncles and sellers willing to take payments directly from the buyer, so explore these options and pursue the one that fits your means.