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Have $15,000? Do you buy a new car or used?

Tara Baukus MelloIt's time for a new car and you've decided you have $15,000 to spend -- should you buy new or used?

With a new car, you have about 20 different choices -- while with a used car, your options are almost endless. Because the average new car costs about $26,000, you may assume that buying a used car is the better choice when you are spending so little. However, that may not be the case. Here are six questions to consider when deciding what's best for you.

How much luxury do you require? While you may have about 20 different choices for a new car for about $15,000, you will be hard-pressed to find many luxury features on these cars. If you want more comfort and convenience in your next car, then you may need to buy used.

How long do you plan to own the car? If you are someone who owns cars a long time -- five years or more -- then a new car (or a very slightly used one) is likely to be the better option. This will give you the greatest amount of trouble-free miles, and you'll be able to take full advantage of the car warranty. If you are the average American who buys a new car every three to five years, then you can easily get that out of most used cars, though you should pay attention to how much of the warranty remains on your used car. Be aware of how the warranty will affect your budget for car repairs.

How much maintenance are you willing to do? All cars require regular maintenance. However, if the car has 40,000 miles or more, it will require some major maintenance. Many cars require a long list of recommended services at 40,000 and 60,000 miles in particular. These services can be quite costly, and they may also require your car to be in the shop for a full day. So if you buy used, be prepared for the extra cost and the inconvenience of not having your car for a full day. With a new car, it will be several years before you have to contend with this -- or maybe not even at all if you typically keep your cars for just a couple of years.

Can you put money in savings for repairs? In addition to regularly scheduled services, used cars generally require more frequent repairs. While today's new cars can easily travel 100,000 miles or more, smaller parts tend to fail once cars get above the 50,000-mile mark. These may not be horribly costly, but several $100 to $200 repairs add up quickly. Create a separate savings account so you're covered when faced with these issues.

You'll also need to keep up with basic wear-and-tear items, such as brakes and tires, as you would with a new car. However, you may be faced with replacing these very soon after purchasing a used car if you didn't check on their condition when you made your purchase.

Are you financing? Interest rates on loans for new cars are lower than they are for used cars; so if you are financing, you'll actually spend less overall if you buy a new car than a used one. Compare new and used car interest rates and determine the cost difference.

Do you expect to trade this car for your next one? New cars depreciate the most in the first two years of ownership, so buying a used car means you can avoid taking the depreciation hit. However, if you plan to own your car for five years or more, then you may find yourself with a car that's worth very little when you go to trade it in. So, if you buy used now, plan to put savings aside regularly for a down payment on your next car.

Ask the adviser

If you have a car question, e-mail it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories.
 

Bankrate's content, including the guidance of its advice-and-expert columns and this Web site, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation.  Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy.  Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

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