A lot of people see their aging car in the driveway and start thinking, “Is it time to trade up or should I keep driving it?” In the perfect world, everyone would do their due diligence before buying a car, plan ahead financially and buy a new one when it makes financial sense. But since we live in the real world, we thought we’d help people better understand a few factors to consider when choosing to keep their car or buy a new one.
Plans for Your Old Car
The 100,000-mile mark is a turning point in a car’s worth as it typically indicates the end of the manufacturer’s warranty. If you plan to trade or sell your old car, then you should consider doing so around the 90-98,000 mile mark.
However, if you plan to give your car to a friend or family member, or even donate it, then you could potentially hold on to your car for more time and get more use out of it. That is, assuming you maintain it properly.
When we worked in direct retail automotive, we closed thousands of car deals. Not once did anyone ask us to review the factory-recommended maintenance and price out those services. Those are very real costs of ownership that will prolong your car’s life for years, but they come as a surprise to most owners and are used as rationale to buy a new one.
Any car dealer will have these numbers handy. Use them to get a better idea of your total cost of ownership when you buy a car. With proper maintenance, cars are designed to run for 10-20 years. Knowing your numbers ahead of time will prevent that sticker shock when you get a quote from the mechanic and help you make smarter decisions around maintenance.
Your Driving Habits
A car is a depreciating asset, and that depreciation is measured primarily by mileage. If you’re someone who’s constantly on the road, your car will depreciate faster than someone else’s urban commuter car. That means less trade-in value.
Driving too much would also exclude you from leasing a new car. So when it’s time to upgrade, you’ll be responsible for a new, likely higher, car payment on top of the sales tax on your new purchase.
Your family size and lifestyle have a tremendous effect on your car buying decision. Let’s say you’re married and expect to start a family in the next year or two. If both of you have sedans, then you may not want to rush into buying another one. As your family grows, you’ll want to sell or trade it in for something larger. By then, you’ll have paid the sales tax and much of the depreciation on the car, and you’ll end up losing a bit more money than if you had planned the purchase ahead of time.
Buying a car is like buying a house: there’s a lot to consider and a lot of numbers to crunch. Most buyers only look at the short-term factors, like how the new cars have this and that, or how their old car is making a strange noise now. But by giving a car purchase the same long-term financial planning you give a home purchase, you can save yourself time and money down the road.
Let Tailored Auto save you the time and hassle. Our experts will advise your entire car purchase and negotiate on your behalf. It doesn’t get any easier.