We need cars. Without them, we wouldn't be able to get to and from work, school, and other obligations — to say nothing of the fun and social things we want to do. The overwhelming majority of Americans own cars, and the time will come when you'll need to buy a new one.

But the problem lies in the expense of the car. Americans are struggling financially, yet nearly all of us find ourselves trying to figure out how to afford pricey cars. It doesn't have to be this way: you can get the right car for less if you know how to craft a budget — and, more importantly, how to stick to it.

The danger of "overbuying" your car

One major reason so many of us are struggling to afford our cars is that we're "overbuying." We're buying more car than we need, and we're not sticking to our budget. When a car dealer shows us the true cost of a car, we're shocked, but we make it work — or, at least, we think we do. But when our finances are struggling and repossession is looming, we'll know we didn't really "make it work" at all.

Your budget is vital

The key to avoiding overbuying is your budget. You need to set your budget before you start shopping. And, above all, you need to stick to it. If you do these things, you should never leave the dealership with more car than you can afford.

How to make your used car budget

Car budgets will look different for different buyers, but there are some basic things that we'll all want to consider.

First, how much cash do you have to spend on a car? This should be cash that you can actually spend, of course. The expense of your car shouldn’t be taken from emergency fund, nor should it be pulled from retirement savings.

If you have enough cash to buy a car that suits your purposes outright, then your budget is pretty much set already. But, for many of us, there are more questions to ask: are we willing to take out debt to pay for our car? If so, how much debt can we afford?

Car loans can be a perfectly healthy form of debt, but you need to be smart. Follow common-sense rules for limiting your expenses. The rules you'll find online vary a bit, but they're all offering very similar advice about limiting the percentage of your income that goes toward your car payment (or — in some versions of the rule — your total car expenses, including gas, maintenance, and more). For instance, one such rule suggests that your total car expenses should be no more than 20% of your total take-home earnings.

Sticking to your budget

Making a budget is a minor chore, but your real test will come when you have to stick to it.

Overbuying often happens when we find that our budget covers the advertised price of a car, only to later realize that we're over-budget once we add in optional packages and the annual percentage rate (APR) of our car loan.

Your budget should be all you have to spend including these hidden costs. If you can't swing it, walk away and start your search anew!

There are ways to make cars more affordable and make sticking to your budget easier. One is to shop online. With a larger selection and more competition, online shopping can be more affordable. Plus, you'll avoid some of the shady tricks that salespeople at dealerships employ in order to get you to spend more.

There are other reasons to shop online, too. Shopping online is more convenient. You can shop from the comfort of your own home and, unlike the dealership, the internet is open 24/7. You can still get reliable dealer cars online, and often for less. A dealers auto auction could be your opportunity to get more car without going over your budget.

Other ways to save money include enforcing strict rules about which optional packages you get for your car, buying a used car instead of a new one, and trading in an old car for a discount. But, ultimately, there's one factor in sticking to your budget that is more important than all the others, and that is you. You need to have the willpower and financial sense that it takes to avoid overspending.

Working within your budget to find the perfect car

Getting the right car for you means getting a car that doesn't put you in a financial jam. Come up with a smart budget and stick to it. You'll be happier with your new car if you're not worrying all the time about how you'll pay for it.