What makes more financial sense: keeping your current car or buying a new car? When confronted with this decision, most people do not know which option to choose. Before you head to your local car dealership (or scrap yard) take a look at this financial breakdown.

Let's begin with those of you that are new car advocates. The price of the average automobile in Canada is constantly rising. Thus, you'll have to fork over a lot of hard-earned money in order to buy a new car, truck, or SUV.

Then again, buying a new car means forgoing expensive repairs, but there's one more thing to think about: the monthly cost of owning a new car. Owning a car is a lot like making credit card payments. You will have to pay for your car each month, and most of these payments are quite hefty.

In addition to making new car payments, you'll also have to keep enough money to pay for licensing and registration fees. When you add all of these things together, the result is a fairly expensive car. Now, let's take a closer look at keeping your existing car on the road.

Most people think about buying a new car when their old car no longer fits their lifestyle. If you need a bigger, or smaller car on occasion, then think about renting a car occasionally. This way, you can have the type of car you need when you need it, but you won't be stuck paying for a new car.

The other reason why many people get rid of an older car is that car repairs can be expensive. You can easily sink thousands of dollars into an old car, and this can be a costly endeavour. Still, keep this in mind: most car repairs do not equate the monthly amount due when you purchase a new car.

If your car is old, but not yet considered a clunker, it's really a matter of weighing what will cost you less in the long run. Older cars may need more maintenance, but when that maintenance costs consistently adds up to more than the monthly cost of a new car, it may be time to bite the bullet and buy a new one.

If making car repairs has left your bank account dry, then you may want to think about applying for a car repair loan through a private lender. These loans were made for people that can't afford the cost of repairs, but can't live without their vehicle. The loans are easy to obtain (no matter what your credit may look like). Is buying a new car a better idea than keeping your old car? Do the math and decide what is best for your financial situation.