When your car needs repairs, it’s always tempting to consider purchasing a new vehicle. It’s tough to pay money to fix your older model, leaving you wondering – is it better to spend less money more often on repairs over time, or spend lots of money all at once on a new car? Well, it’s more complicated than that. Every situation is different, and your particular answer will depend on a number of factors that are unique to you and your car. In general, it’s almost always better for your budget to repair your existing vehicle rather than buy a new one. It’s very unlikely that the price of repairs will outstrip the cost of a new car, unless your current ride is very old and/or very run down. We’ll go into more detail about the breakdown of auto repair versus buying a new car below.
The cost of repairs is less than a new vehicle.
Scheduled maintenance is a necessary service needed on any vehicle, and won’t go away when you purchase a new vehicle. For bigger repairs, it can be shocking to get a repair quote in the thousands, but repairs of that scale don’t happen very often and they are still just a fraction of the cost of a new car. You could make the argument that you could use that money as a down payment on a new car, but that doesn’t cover the entire cost. You would still have to sign up for a monthly payment until you can buy the car outright. If your current car is paid off and still functional, it’s more cost-effective to get it fixed.
New cars incur higher insurance and registration costs.
New cars are exciting, but the cost to insure and register them is higher. That’s just a fact. This is an additional cost you need to factor in when buying a car. You may not see it on the price tag, but it will raise the overall cost of owning and operating your vehicle. It’s something to consider before purchasing.
Your new car will immediately depreciate.
From the moment you take your shiny new ride home, it starts to depreciate in value. In the first year alone, most cars lose over 20% of their value. All cars depreciate as time goes on, but depreciation is especially painful on new cars – lowering the resale value and making the car worth significantly less than you paid for it immediately.
Keeping your older vehicle is more cost-effective than trading up for a newer model.
This may seem obvious, but it seems that car commercials expect us to trade in our car for a newer version every few years. This is expensive! Driving your car for longer, like 6 years or more, before getting a new one means you’re getting more value out of the vehicle and you have time to pay off the car in full. You can even start saving for the next one while you still drive your functional car. Instead of being beholden to a car payment every month, you can use that extra cash for savings, or anything else!
Sometimes there are compelling reasons to sell or trade your older vehicle and get a new one. Many people upgrade from a tiny commuter car to a more kid-friendly vehicle when their family expands. If your current car is a safety hazard, it may be time to upgrade to a newer and safer model. And in rare cases, where the price of necessary auto repairs actually exceed the value of your car, you may consider purchasing a new one. Since every car and car owner is unique, there’s no hard and fast rule for auto repairs versus buying a new car. After taking the above factors into consideration, you need to make a decision that’s right for you.
Central Avenue Automotive is always here to answer your questions and help see whether repairs are better for your budget. Give us a call!