Cars are expensive. Between the purchase price, the interest you pay on your loan, and the maintenance costs along the way, there is nothing cheap about owning a vehicle. With that said, most people don’t have a choice on this purchase.
Unless you live in a big city and can rely on public transportation, you likely need to own a vehicle. By making the best possible financial decisions with regard to your cars, you can make the best of this costly part of life.
One of the key decisions you need to make as a car owner is determining when to trade your vehicle in on a new (or newer) model. How do you know when the time is right? Consider the four tips below.
1. Your Vehicle No Longer Meets Your Needs
Sometimes, the decision to trade-in your car won’t have much to do with finances at all. For example, if you are currently driving a vehicle that no longer meets the needs of your family, it will be time to make a change.
This is common for people who have children. A sedan or crossover that worked for the family when the kids were young might soon start to feel crowded. If you need to move into a larger model, trading in your current car before it completely runs out of value is probably your best bet.
2. The Repairs Are Adding Up
When you seem to be taking your vehicle to the shop more than you are taking it to work or anywhere else, it may be time to ‘cut bait’ and move on. Depending on what is actually wrong with the vehicle, you might still get a decent return on your trade-in.
Upgrading to a new vehicle in this situation will save you from the cost of those ongoing repairs, and it will also save you the hassle of those visits to the shop.
3. You Need Better Mileage
Gas mileage is another factor to keep in mind as part of this debate. If you drive a significant number of miles each day for work, trading-in your current car for a model with better gas mileage could lead to major savings.
The cost of fuel for a daily commute can add up quickly when driving a vehicle that burns gas at a high rate. There are many fuel-efficient models on the market today, so it may not be hard (or even expensive) to trade-in your car for the purpose of fuel savings.
4. It Fits Your Budget
If you are doing a good job of tracking your budget, it should be relatively easy to find an opportunity to trade-in your car. Remember, you’ll probably need some money for a down payment – in addition to the money you receive for your trade-in.
So, you’ll want to make sure the funds are available when you get ready to make a purchase. As long as you time it right, it’s possible to move into a new vehicle without sending your budget too far off course.
How often do you trade-in your car? What factors do you consider?
Photo courtesy of: Nino Ubezio