How to know when it's time to buy a new car
Content
Changing a car is a big decision and it's not something you do every day. Most likely, you have developed a close bond with your current car. After all, you have to commute to work or around the city to keep up with business or social gatherings. You and your car spend a lot of time together, so deciding if it's time to replace that car can be tricky. Whether you're considering a replacement due to the potentially high repair costs of your current car, or a change of pace, take the time to thoroughly research your options before making any long-term commitment.
Method 1 of 2: Choosing Between Car Replacement or Repair
Step 1: Get a repair estimate. You cannot make a rational decision about whether it is in your financial interest to keep your current car and have it repaired or find a brand new car if you do not know how much it will cost you to repair.
You will also want to check your current car for any other repairs that may be needed in the near future.
Step 2: Determine the value of your car with and without repairs. You can get an idea of how much your current car is worth, both in its current condition and if you choose to fix it, using the wizards available on the Kelly Blue Book or NADA websites.
Step 3: Determine replacement cost. Estimate how much your potential replacement car will cost, taking into account payments if you can't buy it right away.
Assess your finances to see if you can handle the monthly car payment. Use the online calculator to find out how much.
Step 4: Make a choice. Make an executive decision on whether to keep the vehicle or replace it once you are well aware of the associated costs for both options.
Unfortunately, there is no set formula because a wide range of variables are at play. However, it is wise to opt for a replacement car if the repair will cost more than its value in good condition. Otherwise, you will need to weigh the advantages and disadvantages of your unique situation.
Method 2 of 2: Make a decision to replace or keep the car
Step 1: Consider why you might need a new car. While you might want a sports car that can go over 200 mph with a bunch of luxury extras, it might not fall under the essential category.
On the other hand, you may have received a big promotion and you have an image to maintain. These are situations that go beyond black and white mathematical equations and depend on subjective factors.
Step 2: Determine the cost of the desired replacement. Research how much your desired replacement car will cost, taking into account whether you will have to make payments and what interest rate you can probably lock in.
Step 3: Take an honest look at your finances. While you may be able to pay for your desired new car today and in the near future, your financial situation can change in the blink of an eye due to unforeseen factors such as illness or job loss.
- FunctionsA: If paying for a new car would be a financial burden, it might be in your best interest to wait.
Step 4. Make a list of pros and cons to help you decide. If your current car is in good condition and you own it completely, you can save quite a bit of money by driving it as much as you can.
- Functions: These savings can go towards a down payment on a new car in the future or towards larger purchases such as a house.
With a secure financial position, this may not matter as much in the decision-making process. Regardless of which path you end up taking, your judgment will be more sound when you fully understand the pros and cons of each option.
Knowing how to make smart choices when it's time to replace your car is a situation you'll encounter more than once in your life. So, be as informed as possible before making a decision and learn from experience for future decisions.
