With auto makers and dealerships slashing prices and offering extremely generous incentives, buying a new car now could actually prove to be cheaper than buying a used one. Just be prepared to stomach the risks of bankruptcy-protection filings and swift depreciation.

Typically, used cars are a better value. Not only are they cheaper, but depreciation is less of a factor (someone else had to lose 10% to 20% of the car's value when they drove it out of the dealership lot). However, now a perfect storm of events in the industry have put monthly payments for some new vehicles on par with (or, in some cases, even less than) those of models from just a year or two ago, says Lincoln Merrihew, vice president of business solutions for TNS North America, an auto market research firm.

Consumer demand for used vehicles pushed prices higher at the same time desperate auto makers started offering four-figure cash incentives and 0% promotional financing for new vehicles. Sweetening the deal, dealerships also became more willing to let new car shoppers combine promotions and, in some cases, even haggle, says Merrihew.

But that doesn't mean buying a new car is always the most affordable option. Here are six factors to consider before you head to the car lot.

Financing

Even though lending remains tight, loans for new vehicles have become easier to secure recently, says Jeff Schuster, executive director of forecasting for J.D. Power & Associates. The vehicle s current value is an absolute, and its eventual value is easier to gauge so there isn't too much guesswork involved for lenders. New car loans often come with cheaper rates. The average rate on a 36-month loan for a used car is 7.64%; for a new car, it s 7.01%, according to Bankrate.com.

Land a promotional rate and buying a new car gets significantly cheaper. You're not going to get 0% [financing] on a used car, says Jack Nerad, executive editorial director for Kelley Blue Book. Lenders still require excellent credit, though. FICO (FIC), the company that calculates the credit score most lenders use, estimates you ll need a score of at least 720.

Purchase price

Thanks to the stimulus package, you can also deduct sales tax paid on a new car valued at up to $49,500. For more details, click here

Yet the gap between used and new remains wide on many other models, especially popular ones. Even with $1,500 in dealer cash, the 2009 Nissan Altima would still cost $4,120 more than a 2007 model in excellent condition.

Depreciation

Of course, depreciation should always be factored into the equation. Consumers planning to keep a car for fewer than five years will likely get a better value buying a used car from a recent model year, which already has that initial depreciation built into the price. But if you plan on hanging onto the car for at least five years, it s alright to go for that temptingly priced new car, says Merrihew. The price of a car that s more than five model years old is largely determined by its condition, rather than the initial selling price.

Model year

Dealerships may be offering some truly tempting incentives on 2008 models, but you probably should steer clear for now. There s some false savings there, cautions Nerad. On paper, those cars are almost two years old. Unless you re planning to buy and hold the car for at least five years, a slightly pricier 2009 will hold its value much better, he says. If you must have that new, bargain-basement 2008 model, calculate the price of a used one in excellent condition at Kelley Blue Book's web site and use that to negotiate price with the dealer.

The brand's future

General Motors (GM) has already said that if it can t sell its Saturn, Saab or Hummer brands soon it will have to shut them down. That could mean reduced resale values for anyone owning one of these cars. And should the auto maker file for bankruptcy protection, the values on its other brands are likely to drop, too -- at least until it emerges from its restructuring. (For more on the risks and rewards of buying an American car right now, click here

Layoff risk

Worried your job is at risk? You may find some comfort in auto makers layoff protection plans, says Schuster. These plans offer to alleviate some of the financial pain of car payments should you lose your job. Ford (F), for example, offers to cover payments on a new car for up to a year if you lose your job, while GM will let new car buyers return vehicles without penalty. Just be sure to read the fine print first. (For tips on layoff protection plans, click here