New car fever is an ailment that people get when their old vehicle begins to be viewed more as a jalopy than reliable transportation. This does not have to be the end of your relationship with this vehicle. Frequently, doing a little repair work on the old car is a far better option economically.
Repair or trade?
People often say that they would be as cheap to make a monthly payment on a new car as to fix up the old one. This is rarely true in the long run. While every car does reach a point where its life is over, that place frequently arrives much later than people realize.
Compare repair costs to your car payment over a six month period.
At $300 per month, a new car will cost you $1,800 plus taxes and registration to own for the first six months. This formula does not factor in the cost of depreciation that strikes a new car value as soon as it is titled to the new owner. Just in cash costs, ownership of a new vehicle is approximately $2,400 during this time period.
This is enough money to replace a transmission or engine in a used car. It can do multiple brake jobs, oil changes, and other lesser repairs. Generally, most cars can be put in good working condition for less than six months worth of new car payments. This frequently finishes repair costs for many months. The financial scale almost always tips in favor of keeping your old car instead of trading.
Your old car is not likely to lose significant value over the next year.
New car value falls thousands of dollars during the first year of ownership. Used cars lose almost no value in comparison. If you are a light driver, some used cars may actually appreciate slightly over a one year interval. A used car in good condition today will often lose less than 10% of its current value over the next 12 months.
Insurance may be less on your current vehicle.
Buying a new car can boost your insurance premiums. This is especially true if you have dropped your collision insurance because your car is loan free and getting a little older. When computing the cost of owning a new car, insurance can add several dollars per month into the equation.
Older vehicles are less likely to be stolen.
Even if your car is insured, getting it stolen can be more than an inconvenience. You may have other personal items in the car including credit cards and types of identification that could help an identity thief. While older vehicles are sometimes easier to break into, they are generally less desirable for car thieves. The result is that they are stolen less often.
Repair bills will not be continuous on your current vehicle.
Car repairs can seem non-stop for a while. However, they will eventually stop for a while. If you have a decent mechanic, you should be able to have two or three repair needs covered in one visit to the garage. After a couple of trips to the mechanic, most cars are in good enough shape to give several months or more of repair-free driving. This is like money in the bank. Since your car is paid for, you get to do all of this driving for just the price of the gasoline. With a new car, the repairs may be absent, but the payments are going to go on for years.