So the time has come to replace the ol’ sedan, has it? Buying a vehicle is not always an easy decision. There are plenty of cars on the market and lots of sales folks who need you to sign a dotted line to meet their monthly goal. During this time, the first thing that you should decide is if you are looking to buy a new or used car, as that will inform the rest of the purchasing process. As for which one is right for you, it depends on several different things. Here are some things to think about if you are considering a new or used car...

Weigh Against Your Monthly Budget

Obviously, the first thing to consider is if a new car is even in your budget, because if it’s not, then you’ve made the choice pretty easy. As such, consider your monthly budget that you’re willing to spend on transportation costs, and then do research about how much your monthly payments will be on a new car. Your transportation budget should be weighed against your general budget. If you don’t currently have that budget planned, check out this budgeting article to get it figured out first.

Consider Depreciation

Cars are not like homes. They don’t maintain or increase in value. Vehicles have a rapid depreciation rate. If you purchase a new vehicle, it could be worth half of its current value within 3 years, depending on the condition on mileage. As such, you are almost always going to be losing more money to depreciation when you buy a new car. This isn’t necessarily an indictment of getting a new car, but you need to know that both the upfront and backend costs are higher when considering if it is worth it to you.

Is Your Vehicle an Investment?

While your car generally can’t be an investment from an equity perspective in the way that a home can, it can still be an investment if you are using it for a specific purpose. If you have your own business or are convincing your work to purchase a company car, then that vehicle is providing value in some way. In these instances, it’s easier to get your return on investment if you buy used, which is why this article argues never to buy your company vehicle new.

However, an exception to this rule would be if your company’s brand necessitates a newer or flashier image, which can be bolstered by getting the latest-and-greatest model of vehicle. Another exception to this might be because you want to achieve a better interest rate, as newer cars are known to have better financing options.

New Cars Have Less Risk

Most of our points so far make it look like it is far better just to get a used car. If you stopped reading right here, then you probably would think there’s no reason ever to get a new car. However, there are some benefits that you might find worth the money. For example, a new car offers you a certain peace of mind because there is less risk of something breaking and needing repairs. Driving a new car off the lot practically guarantees (with some exceptions) that you won’t need any repairs for the first 10,000 miles.

Is Your Car a Status Symbol?

Let’s face it, the real reason somebody wants to drive a new car is because of the pride that it gives them. People who want to drive a new car care about the latest-and-greatest in technology, and are willing to pay to experience the features that a new car has to offer. In addition to that, a new car is a status symbol that shows that a person cares what they drive and has the expendable income to get it. Is that status symbol worth an additional $10,000 upfront and an additional $10,000 in depreciation? That depends entirely on you, but I guess if money’s not an issue, then why not.