Should I Keep The Old Clunker or Or Buy A New Car?
Some people love their cars just as much as they love their pets. They give them names and tend to their every need. There are others who treat their vehicle as if they’ve taken a vow of marriage, planning to be together until death do us part. Then again, there are those who buy this metal contraption called an automobile that they really can’t afford and end up trading it in long before they get their money’s worth out of it.
In fact, most Americans trade in their cars simply because they want to, not because they need to.
Let’s be honest, buying a car is serious business. Vehicles require maintenance, repairs, oil, gas, tags, insurance, taxes, and of course payments, which shouldn’t be more than 15% of your net spending income – is yours?
If you really want to know the foolproof means of saving money on cars, it is this: keep your jalopy and drive it until the wheels literally fall off. Plain and simple.
WHAT’S THE HITCH?
Look at it this way. A suitably cared for vehicle should be running like the best or at least the second best thoroughbred. Long after the odometer has clocked up over a 100,000 of miles, you should be able to keep driving it and save money. Why?
-You have no car payments.
-Insurance premiums are lower.
-In some states, registration fees and personal-property taxes will be lower.
Unfortunately, the downside to keeping your old clunker is that the more it’s in the shop, leaving an oil slick everywhere you park, the more you will think about seriously replacing it for a newer model. In the interim, the money you saved by not purchasing a new vehicle is being lost by the increasing cost of keeping your old buggy on the road.
The question is: When should you trade in your old vehicle? How long does it take to pay the increased cost of purchasing a new vehicle, for it to become defensible by the increasing expense of maintaining your old car? Well, much longer than you realize.
Keep in mind that car loan payments are pretty much a curse, and you may come across much higher repair costs than you imagined. In this scenario, your older vehicle still comes out a winner. Outside of something major happening to your older car, like an engine repair, an old car is usually cheaper to possess than a new one.
TO BUY OR NOT TO BUY, THAT IS THE QUESTION
When deciding if buying a new car is the right choice against keeping your older one, think about the costs of each.
-Monthly costs for repairs for a vehicle around seven years old run roughly 5% of a family’s budget.
– A new car will cost approximately 15% of a family’s budget. It does not take a rocket scientist to comprehend that 5% is a lot less than 15%. The older car wins hands down.
– It’s not unusual to defend purchasing a new car to get better gas mileage than an older car; however, there are new cars that would require twenty years or more of usage to attain mileage savings equivalent to the vehicle’s cost.
– Unless your vehicle has “had its day,” which means 200,000 miles or more, it is frequently less expensive to repair the car you currently own than to replace it with a new model. Of course, if you are lucky enough to own something like the world’s oldest running vehicle, the historic 1884 Die Dion Bouton et Trepardoux Dos-a-Dos Steam-Runabout that recently fetched $4.2million at auction, keep what you have!
– Cheap financing may tempt you to purchase a new vehicle; however, read between the lines. Regardless of how nice the car salesperson is, they may have even offered you a fine glass of champagne; nonetheless, the new car itself will in all probability cost more.
WHEN IS THE BEST TIME TO BUY A NEW CAR?
– If repair costs are more than the value of the vehicle, or a year’s worth of monthly payments, the time to purchase another vehicle is now. You can check the True Market Value of your vehicle online.
– If you decide to purchase another vehicle, a used car is nearly always the more cost-effective choice mainly because you evade a huge depreciation hit.
– Remember that a used vehicle may come with its own set of mechanisms that need repairing, so choose wisely if you decide to take this route.
– You will probably have a loan if you purchase a new vehicle and will be required to take out comprehensive insurance. Older less costly cars will usually require less comprehensive insurance compared to a newer car. Therefore, the cost will be much cheaper.
DON’T LET YOUR OLD CAR MAKE THE CHOICE FOR YOU
Throughout an average family’s lifetime, more money will go towards vehicles than a home. As a result, when thinking about purchasing another car, keep in mind that the least expensive vehicle is normally the one you are currently driving. Nevertheless, cars do eventually have their day, and if you must purchase another vehicle, it’s best to buy a solid used car, if possible, one that you can pay in cash. Purchasing a new vehicle may seem like a simple way out of a steep repair bill, however, depending on your situation, it may not be the best economical decision.
Hogan & Sons Tire and Auto provides automotive safety and auto repair information for the sole purpose of educating the community at large. “We believe an educated customer is a loyal customer.” 8 Locations throughout the Northern Virginia area including locations in Fairfax, Leesburg, Falls Church, Sterling, Herndon, Winchester, Purcellville, and South Riding. Hogan & Sons Tire and Auto: http://www.hoganandsonsinc.com.
Copyright Hogan & Sons Tire and Auto 2014