By Pete Alfano
Maybe it was your first ride and has sentimental value. Or maybe it is the car in which you drove your wife and newborn child home from the hospital. And maybe your reasons for holding on to that old car of yours are strictly economic: You own it outright after paying off an auto loan. But inevitably, the day comes when you realize your car is in the repair shop more than it is in your driveway, and it is time for a new set of wheels.
It is not an easy decision, and even experts are divided over the best time to go shopping for another car. Some advocate driving your car until the wheels fall off, especially if you don’t take long trips and you work remotely. Other auto experts say pay attention to math. For example, the American Automobile Association (AAA) estimates that repairs and maintenance of older models can cost up to 16% of owning a vehicle. An analysis by Consumer Reports found that the cost of maintaining a car doesn’t begin to rapidly escalate until the car is five years old.
Other factors are also at play in the decision to get a new car. Older models may not have the technological advances that new cars have, such as advanced front, side, rear, and even knee airbags. They may not have a backup camera, blind spot sensors, keyless ignition, wireless phone chargers, lane keeping assist, forward collision mitigation, automatic emergency braking, GPS, and tire pressure monitoring, among other bells and whistles that make it safer and more comfortable for you and your family. New models are more environmentally friendly and have better fuel efficiency than older gas guzzlers, which saves you money in the long run.
A few things to remember are that newer cars are run by computer chips, and getting an extended warranty covering mechanical and electric issues is almost mandatory and will add about $3,500 to the cost. Factor in that your old car may not be worth much as a trade-in, and auto insurance will likely increase as well. But consider whether gas efficiency savings and no repair costs outweigh or cancel out those expenses.
You have probably heard the adage, “One man’s trash is another man’s treasure.” Before going to a dealership, use websites like Kelley Blue Book, Edmunds, TrueCar, Consumer Reports Car Value Estimator, and others to determine your old car’s worth. Instead of a trade-in, you might consider selling it privately. Parents with a son or daughter reaching driver’s age or going off to college may be willing to spend a little more to buy your car. Hopefully, you have kept the maintenance and repair records and agree to let the prospective buyer have the car inspected. The hassle might be worth it and give you additional cash for a down payment on a new car.
Do Your Homework Before Car Shopping
In addition to knowing the value of your trade-in, avoid buyer’s remorse by thoroughly researching the price and availability of a new car. If your family is growing, you might want to look at an SUV or perhaps a minivan. Would you pay more for a hybrid and recoup that money over time by making far fewer trips to the gas pump? Many auto websites give you the opportunity to “build” your car, picking the trim package that best suits your needs. And look at different makes and models. Then, you can contact a dealership online and make an appointment to test drive the car you want. If you are interested in a Honda CRV, for example, also test drive a Nissan Rogue, a Toyota Rav4, and Mazda CX-5. With the exception of buying a house, a new car will probably be your most significant expense, that is until those kids go to college.