New-car envy is real. Looking at the latest sleek designs and all the latest technology offered today can certainly lead us to shiny-new-car syndrome. It looks so pretty! Yet, if we stop and calculate the impact buying that pretty shiny new car will have on our finances, it certainly should give us pause. There are many reasons to keep the old AND buy the new. But since most of us can’t have both, let’s look at when to hold onto what we already have and when it might just be that time to buy something shinier.
Why keep the old? Well, when it comes to new cars, money is a huge factor and it’s not limited to the actual cost of the new car. New cars increase insurance costs, monthly payments, and the cost of annual tags. This must be one of the biggest factors in determining your decision. Don’t get caught up in how cool it is without considering the long-range impact on your budget. And don’t forget that new cars, on average, decrease in value 22% in first year alone.
Keeping the old also gives you time to save for a newer one, pay off other debt, and maybe even contribute to retirement. And don’t forget the impact on the environment: disposing of an old car impacts our landfills and adds to hazardous waste not to mention the amount of natural resources required to build new vehicles. It all makes an impact.
Even so, with all the reason to keep the old, there are some convincing reasons to go with the new. Some of the most considerable factors that will tip the scales toward buying new are the latest innovations in safety:
- Backup camera
- Curtain airbags
- Electronic stability control (ESC)
- Forward-collision warning
- Forward-collision warning with automatic braking
- Blind-spot monitoring
- Lane-departure warning
And even though these shouldn’t be the leading reasons to go with the new, we can’t forget all the awesome infotainment options:
- USB port for plugging in a phone
- Bluetooth phone connectivity
- Voice commands for selecting audio
- Built-in navigation
- Ability to use integrated apps like Pandora or Spotify
Then there’s some of the practical reasons associated with cost. The longer a car stays on the road, the more we pay out in annual maintenance and repairs. Belts crack, transmissions slip, brakes wear. One example: Timing belt replacement usually comes between 80,000-110,000 miles and can run around $1,000. When we start paying more in repair costs than we would for monthly car payments, we know it’s time to sit down with a calculator and dig deep into all the pros and cons. The good news is, you don’t have to figure it out alone.