As your car ages, it will no doubt need more repair work. So the question often becomes should you get a new car or continue to repair you current one? With more cars passing the 100,000 mile mark and recent gas price declines, more and more people are opting for keeping their current car.
Before you start test driving that brand new model consider the following:
Can You Afford To Set Aside 15%-20% of Your Income?
- A general rule of thumb is to not spend more than 15%-20% of your net income on a car. This includes not only your monthly payment, but also take into consideration repairs, maintenance, and insurance
- Do you really want that chunk of money coming out of your monthly funds? Consider saving that money towards your next car and you could have a decent down payment and avoid those high finance charges when you do decide to buy.
- If you still find you need additional insight visit this calculator from Allstate to help you with your decision.
Do You Keep Up on Routine Maintenance?
- A lot comes down to car maintenance. If you diligently follow the manufacturer’s maintenance schedule the vehicle will be in good shape way into the 6 figure mark. The problem is most people disregard the scheduled maintenance and the minor issues can quickly turn into catastrophic problems and easily cost double to fix.
- It’s often less costly to repair an existing car rather than replacing it with a new vehicle. Look at it this way – a $500/month car payment will cost you $6000 per year added to which you may still need to buy tires and some routine maintenance. Well timed repairs and routine maintenance will likely be considerably less than $6000 per year!
- European cars tend to be more expensive to buy initially, however, they generally keep their value better in the long term. In addition, many European models are designed to well exceed the 100K mile marker. Good maintenance has helped many of our customers exceed 200K and even 300K miles some cases.
Don’t Forget – Higher Insurance & Registration Fees
- Don’t forget those taxes and fees you have to pay in addition to the sticker price of a new car. New cars generally require higher insurance fees to cover pricier repairs in the event of an accident.
- As a general rule, foreign brands are more costly to insure and repairing them generally tends to be pricier.
The Rate of Car Depreciation is Insane!
- On average, a car depreciates the most after one year of ownership and continues to depreciate at a rate of 10% each year thereafter for the first five years, according to Consumer Reports. See the chart below:
There are many things to consider when you are looking at buying new vs. keeping your current vehicle. Generally, if your vehicle is paid off and your annual repair fees don’t outweigh the cost of a monthly payment it’s best to keep your current car and save the money for a full cash payment on your next vehicle. Also, it’s important to find a reliable and trusted mechanic like Rennology Motor Sport. We let you know of your vehicles problems and give you the best solution for you and your wallet!