Car buying advice NEED HELP!

[Jeff Arndt]

I am a young investor and in the next year or two I will need a new car. I bought it in high school and it's running on it's last legs. So I run into a very interesting dilemma that has shown two very distinctive and conflicting view points. Do I buy a used car for about 6-8k cash or do I fully leverage myself and buy a newer car and finance it? After all, real estate can be effective because of the use of other peoples money. However, I'm not a fan of financing a depreciating asset.

Case 1: Old Car Cash Purchase

Pros: No outstanding debt to go against my Debt to Income Ratio.
More cost effective over the long run.

Cons: It's an old car.
Takes a way a large chunk of cash that can be used for a down payment or rehabbing.

Case 2: Finance New to Less Than 3 Year Old Car (Under 25k) (Under 3%)

Pros: A Nicer Car
Can obtain financing at a rate less than my expected return on real property.

Cons: New debt will hurt my DTI ratio.

Your thoughts and experiences!?