A couple of factors are at work in the new car business. Gas prices have been relatively low recently, automobile factories have cut production, and car prices are low in response to the old Law of Supply and Demand.

So is this a good time to buy a new car?

I have a bias I’ll share up front. It’s rarely a good time to buy a new car. New cars are expensive and they lose value as soon as they are driven off a new car lot. When you need to replace a vehicle, it almost always makes better financial sense to purchase a good used car. Now, with that out of the way, is this a good time to buy a car?

Simple answer: this is a good time to buy a car if you need to buy a car. Is the one you’re driving falling apart? Will repairs cost more than replacing the vehicle? Was it totaled after an accident? You’ll know the answer to those questions.

One thing that inspires some to buy a new car is the thought that one can save so much in improved gas mileage that replacing the current vehicle makes financial sense. But it doesn’t always.

How can you know if the savings in gas mileage might warrant purchasing a new car? Explore CarSavingsCalculator.com and play with the numbers. The answer for you will depend on several factors: the number of miles you drive each year, the cost of gas per gallon, the MPG of your current vehicle, the MPG of the vehicle you are considering, your current monthly payment and the monthly payment for the vehicle loan you are considering.

Here’s an example:

Suppose you average 15,000 miles per year and pay $1.95 per gallon in your current vehicle which get 18 miles to the gallon and your monthly payment is $320.00. You’re considering a new car that gets 28 miles to the gallon with a monthly payment of $360.00.

Is the new vehicle going to save you enough to make it a good deal?

Plug the numbers in at CarSavingsCalculator.com and you’ll discover the new car will save you $100.36 per year. That seems like almost an even swap.

But suppose, too, your current vehicle will be paid off next month. Should you buy the new car? That’s really up to you, but in this scenario, if you can wait even a year before buying a replacement vehicle, you can save $4,320.00 buy going just 12 months without a car payment. And that certainly shines a new light on the question about buying a new car.