Should you buy a new or used car?

If your old vehicle is on its last tires, you may be wondering if you're better off replacing it with a new or used vehicle.

That depends on a number of factors.

Typically, car experts say buying used is a better deal. It's true that when you drive a new car off the lot, it automatically depreciates by thousands of dollars. On the other hand, you'll pay more in repairs for a used car.

There are other things to consider, however, such as do you have enough cash on hand for a down payment? Do you have a trade-in that's worth the equivalent of a down payment? If you have good credit it may be easier to buy new with less down payment than if you buy used, according to Autotrader. There is a plethora of manufacturer incentives for new cars in the form of cash back and lower financing costs.

By contrast, buying used means putting money down upfront or a trade-in with equity, so sometimes its is possible to find a new car with a manufacturer's incentive that will take care of your down payment.

Depreciation is another important factor that points to buying used as being the better deal. On average, a new car loses between 20 and 30 percent of its value the moment it rolls off the dealer's lot. Some cars can depreciate up to 50 percent in the first three years. You can refer to Kelley Blue Book's Cost of ownership calculator designed to figure the average five-year costs of any vehicle, including depreciation.

Bottom line, if money is no object, opt for a new car. If it is - and it is for most people - consider the above points before making your purchase.

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