Sunday, June 23

Is It Time to Trade In Your Old Car?

Is It Time to Trade In Your Old Car

Weighing the Pros and Cons of an Upgrade

A new car can sound exciting, but before you race to the dealer, it’s smart to think through the financial implications. Trading in your current ride for a shiny new model can impact your budget in both positive and negative ways. Looking at both sides of the equation can help determine if an upgrade makes sense for you.

Read on to learn more about the impacts of trading in an old car for a new car.

Bigger Monthly Payments and Insurance Bills

One major downside to getting a new car is that your monthly payments will likely shoot up. Unless you buy a stripped-down economy car and make a huge down payment, you can expect significantly higher loan or lease payments compared to your paid-off old car.

According to Edmunds, the average new car loan payment reached $730 in early 2023. That’s the highest it’s been in years. Your insurance will also get more expensive since rates are partially based on your car’s value. Insurers will charge much more to cover a brand new $30,000 SUV versus a 10-year-old $5,000 sedan. Shop around, but brace yourself for higher premiums.

Potential Savings on Maintenance and Repairs

While finances and insurance cost more for a new car, some of your other auto expenses may decrease. Since new cars are under warranty, you won’t face huge bills for major repairs like you would with an out-of-warranty older model. As parts wear out, those repair costs add up and empty your bank account.

New cars can also be cheaper for routine maintenance like oil changes, especially compared to luxury makes. But some high-end models do require pricier upkeep.

Old Car vs. New Car: Other Factors

Beyond the basic tradeoffs, here are a few other things to think about:

  • Fuel efficiency: Newer cars boast improved mileage thanks to better engines and transmissions. More miles per gallon means major savings over time
  • Features and technology: Do you want the latest tech like collision avoidance, phone integration, and in-car Wi-Fi? These options are way more common on new vehicles
  • Warranties: New cars come with multi-year warranties on the full vehicle. With an old car, you pay for everything after the warranty expires.
  • Depreciation: Brand-new vehicles lose value extremely quickly. This rapid depreciation can undermine the financial argument for buying new.

Weighing Peace of Mind Against Cost

At the end of the day, only you can decide if a new car is worth the tradeoffs. Add up what you currently spend on repairs for your aging ride. Also, consider the headaches and safety risks of an unreliable car.

For many folks, the peace of mind of a new reliable vehicle outweighs the higher monthly costs. You just be sure to run the numbers and compare total expenses before turning over the keys to your old car for something newer. The last thing you want is to make a financial decision that you regret every time you hit the road.

This post may contain affiliate links. Meaning a commission is given should you decide to make a purchase through these links, at no cost to you. All products shown are researched and tested to give an accurate review for you.

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