Don't let the new car smell go to your head when borrowing to buy a car

The thrill of driving a new car off a dealer's lot is appealing, but experts warn not to let the new car smell go to your head when it comes to borrowing money to make it happen.

Mark Kalinowski, a credit counsellor and financial educator at the Credit Counselling Society, says you need to know what you can afford when it comes to a car loan.

"If you can't pay for it and they repossess it, well, now your credit's ruined for a long time," he said.

You can only afford so much credit based on your income level, so if you take on a car loan, that will eat away at other borrowing capacity such as a mortgage, Kalinowski said.