How Do You Know When to Buy a New Car?
Your vehicle has served you well – it has shuttled you safely to work, toted your belongings and groceries with care, covered the distance between you and your loved ones—but it hasn’t been working so well lately. You just had the brakes fixed and the motor is now making a strange clunking sound. Each visit to the shop seems to cost a little more and you know that some other (and possibly more expensive) repairs are looming. You just don’t know when to buy a new car.
If this scenario sounds familiar, you may be wondering whether to throw in the towel or hang onto your vehicle for a little longer? You can begin to find the answer by asking yourself a few additional questions.
How much are you paying in repairs? Collect your receipts and keep track of your payments to the repair shop so that you can develop an accurate accounting of your monthly automobile costs. If your vehicle needs repairs that will cost half or more of its value (you can research the value of your vehicle at NADA), it’s probably time to throw in the towel. If your vehicle is paid off and you are doling out less than a couple hundred a month in repairs, you’re probably spending less than you would if you chose to lease or buy a new car. If you are still paying down your auto loan while paying hundreds of dollars in monthly repair costs, I’d consider selling.
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If your automobile is aging and you’re wondering what other big repairs are imminent, find a mechanic you trust and ask him to assess the health of your vehicle. He won’t be able to predict the future but should be able to tell you if any other large repairs are likely to be necessary soon. If you are a handy person, you can also save money by doing some of the repairs yourself.
How much value will the repair lend to your vehicle? If you spend $1,500 on repairs to a vehicle that is on its last legs, you may not get a lot of value for your buck. Consider how much each repair will lend to the life and overall value of your vehicle. If you won’t receive adequate value in return for the cost, either in extended vehicle life or improved trade-in or resale value, don’t spend the money.
Note: Remember to research the recalls on your vehicle before you have any major repairs done to save yourself from paying for work that the dealership will cover.
Is your current vehicle a gas guzzler? I’ve know people who traded in an old gas-guzzling truck for a more economic car, to discover that the loan and fuel costs of the new vehicle equaled the amount they spent on gas alone for the old truck. Fuel cost is a valid reason for purchasing a new vehicle, even if you are not spending a lot in maintenance costs. Not only will the purchase reduce your monthly expenditures, it will reduce the negative impact of your vehicle on the environment.
Is dependable transportation a must? The safety of your vehicle is always paramount but dependability isn’t a necessity for all people. If you travel long distances for work or if you have a young family, a highway breakdown could be catastrophic. If you are in your twenties or live in a city with a great public transportation system, dependability could be optional. This is a choice you will have to make based on your own needs.
Is your vehicle meeting your daily needs? Let’s face it, our lives are in constant flux and it’s difficult to know what we are going to need from year to year. If you are driving an older vehicle, it may have seen you through a life change or two. Aside from the extra repairs, your vehicle may also be too small to hold a growing family, unable to climb the hill to your current home, or unsuitable for any number of reasons. If your vehicle is no longer meeting your needs and you can no longer justify the repair costs, it may be time to trade it in and move on to a more suitable vehicle.
If your vehicle is just starting to show its age, you may want to carefully consider how to transition toward a newer vehicle. You can often save a lot of money by holding on to a vehicle that is paid off and is running relatively well. By tracking costs, considering basic needs like safety and dependability, and determining when the costs no longer match or exceed the value of your expenditures, you will have a better sense of when it’s time to sell.
STOP! Don't shop for your next car without our Car Buying 101 guide to car shopping.