Posted on 2017-12-08
To keep the old car for as long as possible, or to update? It can be a difficult financial decision to make, but if you make the right calculations, it doesn’t have to be.
As a car ages, maintenance costs increase. A recent study by YourMechanic reveals that between the ages of 1 – 10 years there is a steady average increase of $150 per year in extra ongoing maintenance costs for your car. For car aged over 13 years’, extra annual maintenance costs increase more significantly to an average of $2,000.
If your car is paid off but the cost of repairing it is the same as what you could make on a monthly repayment, it’s a no-brainer. You are better off financially if you upgrade.
The costs you should consider are not limited to saving on annual expenses. You must consider the cost of the safety of you and your family. Constant breakdowns and visits to the mechanic could be putting you in more danger than good.
As automotive technology has improved, so has the safety features we find in cars. For example, people who were involved in serious crashes in cars manufactured between 2003 and 2005 are on average around 45% less likely to experience significant road trauma than those in cars manufactured in 1980 (How Safe Is Your Car, 2016).
Are you confident your car is safe? If the answer is no, consider upgrading to a car with a high ANCAP safety rating for peace of mind.
Do you know the current market value of your old car? If not, you may be surprised to see that its value has significantly decreased over time as a result of wear and tear as well as market competition. This is called depreciation. Some cars depreciate more than others.
Now while this isn’t an out if pocket expense, you need to consider depreciation as a factor if you want to make a profit from the sale of your old car to use towards your new car.
In some cases, understanding depreciation will allow you to sell your car and upgrade at a time where you won’t lose too much due to deprecation. An easy way to do this is to search for your car online and see the price range it’s currently selling for. If it’s a good price, you may consider selling and upgrading now, rather when it depreciates too significantly.
The next thing you need to do before you buy is to find a competitive secured or unsecured car loan. We can help. We work with a range of leading lenders who have hundreds of personal loan solutions, even if you have bad credit.