Buy A New Car Or Fix The Old

If you don’t know whether you should buy a new car or fix the old one, you should take into consideration all the ups and downs of these decisions. You need to ask yourself if you are ready for a newer car. You’ll have to think about how much money are you willing to pay for it each month. We recommend that you put aside the money that you would spend for the car payments for at least three months to see if you can handle your budget.

You should make several phone calls to the bank, to your insurer and one to the DMV. You should call the bank in order to find out the rates that they charge on people that have a similar credit history. From your insurer, get some insurance figures for the car you are thinking of buying. Lastly, contact the local DMV to find out how much money you will have to pay with the registration and the licensing.

After this 3-months period you have made significant financial sacrifices that had a negative impact on your life, it means that you are not yet ready to purchase a new car so you should stick to the existing vehicle that you own. If you do decide to purchase a new one, you have to take into consideration the payment. While some lease a brand new model, others will pay in cash for a newer, more reliable used model. If after this period of three months you still want to buy a new/newer car, you at least will have something to start from; taking into consideration that you saved money enough to pay a few months’ payments. Now, you will have a better understanding of how much it will affect your bank account.

If you haven’t made up your mind yet, analyze your current car for a little bit and ask yourself if the money you pay for the repairs cover the costs of a new car. A regular brand new car will set you back approximately $28,000, which is about $475 / month in 5 years after putting down 20%. For example, to rebuilt the transmission of your existing vehicle, you’ll have to pay $1,800, which is a lot of money to spend at one time, but still not as much as the $5,700 / year for the payments of the new car. If you cannot afford to pay these repairs twice per year, you are definitely not ready to make a monthly payment for a new car.

If you still don’t know whether you should buy a new car or fix the old one, you need to be aware of the fact that if you decide to buy a new one, once you drive it off the dealer’s lot, it will lose about 20% of its value while your current car has already taken this depreciation hit. Also, the new car should last you more than the old one, by at least 1-2 years. Back in 2008, the average car owner kept it for about five years or so, before trading it. If the car breaks down earlier that you might expect and you were thinking of getting a new one in a couple of years, by repairing your current vehicle it will keep you on the road and will give you more time to save money for a new car, which hopefully will be more reliable than the one it replaces.

Basically, it is up to you to decide. Both solutions have advantages and disadvantages. Don’t forget about the high rebates and incentives that many manufacturers offer for their models. We all know the peace of mind a brand new shiny car offers so do your research thoroughly and who knows what you might find.

Source: Edmunds | Photo: treehugger

Post tags: Tags: automotive articles, buy a new car or fix the old