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NEW YORK (MainStreet) — The average cost of buying a car continues to rise, with new car prices recently hitting a record high of over $32,000. Not surprisingly, financing is more important than ever, with Americans borrowing an average of $27,000 for new cars and $18,000 for used cars.

But once that new car smell starts to fade, a large auto loan can leave you with buyer's remorse. If you're in the market for a new car, here's how to make sure you zoom away with the best financing deal for your budget.

1. Determine how much you can afford.

To determine how much car you can afford, first consider your other debts—your mortgage, student loans, credit cards, and medical bills. Your total debt load should never be more than 36% of your income. If you're juggling too many other loans, you'll need to keep your car payments to a minimum. Or better yet—extend the life of your current car for a few more years.

2. Check your credit score.

Before applying for any loan, you need to know your credit score. If your score is lower than 720, invest some time in improving it so you get the best possible interest rate. With a little effort, you may be able to raise your score as much as 100 points in less than 3 months.

3. Find out how much the bank will give you.

When shopping for a new car, your first stop should be your bank, so you can get pre-approved for a car loan. Dealer financing may be a good deal, but the only way to know for sure is if you've done your due diligence ahead of time. Remember, everything is negotiable, from price to APR to loan terms. It's easier to negotiate if you have multiple financing options to choose from.

4. Make a 20% down payment.

You may not have enough to make an all cash purchase, but as with buying a home, you should have at least a 20% down payment. Only take out a loan to finance the rest. And make sure the loan term is 4 years or less. If you can't afford the monthly payment on a 4-year loan, then you can't afford the car. No matter what the dealer might tell you.

5. Buy used—the smart way.

One of the best ways to get a good deal on the car you want is to buy a certified used vehicle that has just come back on the lot after a lease. That means someone else has absorbed the cost of depreciation, and the car should be in pristine condition. The same financing rules still apply, but the overall cost is likely to be a lot less.

Written by Lauren Lyons Cole for MainStreet