Ever had that feeling where you're just not sure if your car is worth keeping anymore? We've all been there. Deciding whether to fix up your old ride or trade it in for a newer model is a big choice. It's not just about what you want, but what makes sense for your wallet and your peace of mind. So, let’s dive into how to approach this crossroads with confidence!
Evaluate Your Current Companion
First things first, take a moment to honestly look at your current car.
1. Tally up those repair bills
Want to know what your car really costs you? Gather up all the receipts for repairs and maintenance from the last two years. Add up all those expenses and divide the total by 24. That gives you a solid monthly average of what you're spending to keep your car running.
2. Compare repair costs to value
Hop online and look up your car's current value on a site like Edmunds. If you're consistently spending close to or even more than that amount on repairs, that's a big red flag that it might be time for a change.
3. Evaluate reliability
Let’s be honest with ourselves… how long do you truly expect your car to hold up without (another) major repair? Make sure to thoughtfully and honestly consider the overall reliability of your car, or if you expect more repairs to be necessary sooner rather than later. If you've already had to fix some big stuff and you're just waiting for the next thing to break, it's worth considering a different option.
Assess The Prospect of a Shiny New Ride
1. Calculate the true monthly cost
A new car is more than just a car payment. Don't forget to factor in things like higher insurance rates, the cost of gas (or charging an EV), and registration fees. Add everything up to see what the real monthly total will look like.
2. Check your budget
Look at your budget and be realistic. Can you comfortably handle that new monthly payment? Keep in mind saving money and having enough money for emergencies!
3. Don’t forget about depreciation
The minute you drive a brand-new car off the lot, it starts to lose value. A smart option to avoid that initial big hit is to buy a car that's just a few years old and well-maintained. You get a newer vehicle without that steep drop in value.
So, the bottom line is…
Repair Bills vs. New Payments
If the total you spend monthly on repairs for your current car outweighs the amount you would spend monthly for new car payments, it’s a good sign to trade in for the newer model.
According to Consumer Affairs, the average car will cost around $900 a year, or $75 per month to maintain. The average price of a new car is $48,000 and a used car $25,000, according to Kelley Blue Book.
Let's look at an example. If you were to buy a $25,000 used car with:
...your monthly car payment would be around $458.
So, if your monthly repair payment is higher than your total based of your specific car payment calculations (in this case, $458), you know what to do. Your specific vehicle loan and payments can be calculated on our website with our Vehicle Payment Calculator.
What are your priorities?
Maybe you really care about having the latest safety features or modern technology. Or perhaps a reliable car that gets you from A to B is all you need. Think about what matters most to you in a vehicle.
Don’t forget your financial health
Buying a car is a big deal, so make sure you've got enough saved up for a decent down payment and can handle the monthly payments without feeling stressed.
In the end, deciding on a new car is a personal journey. By being smart about your finances and really thinking about what you need, you can drive off confidently with a choice that feels right for you and your wallet!