When Buying a New Car Won’t Save You Money
Posted on Monday, April 11th, 2016 at 7:00 am
How long should you keep your vehicle? There are those who buy a new car every year or two. Some people believe that buying a new car can save you money. That’s not true in every situation! Here are some clues that buying a new car won’t end up saving you money after all.
Will a New Car Save You Money?
Is your car paid off?
Your current vehicle needs some repairs that are more expensive than you can comfortably afford. This is the point where some people get the idea that buying a new car is the solution to the problem.
Take a moment to consider if you can afford to make monthly payments on a new car while still paying off the old one. Selling your current car in the hopes of getting enough for it to buy a new car is not a realistic expectation.
New cars require maintenance, too.
All vehicles require a certain amount of maintenance. Buying a new car does not mean you won’t have to spend money to keep it running. Some people are of the mistaken impression that a brand new car won’t need to be taken into the shop for a “checkup”.
Lack of regular maintenance can cause parts of your car to wear out and need replacing. Those that skip it or put things off for too long are not going to save money. They are going to end up with a very expensive car repair!
Consider the insurance costs
Some car insurance companies will charge a higher premium on certain kinds of vehicles. The reason has to do with risk assessment. The insurance company will generally believe that a person who drives a mini-van is going to be a safer driver than a person who drives a sports car.
Many people assume that buying a new car won’t change the cost of their insurance premium. You could end up with a more expensive premium than you have right now, especially if you are going from a mini-van to a sports car. On the other hand, you might end up saving money if you trade in the sports car for a family friendly vehicle.
Your car has been totaled
When we think of a car that has been totaled, it often means the car is damaged beyond repair. In that case, you will need to buy another vehicle (despite the expense).
Sometimes, an insurance company will declare a car to be totaled when it is still safe to drive. A minor fender bender could cause a ding that the insurance company feels would cost too much to repair (compared to what your car is worth). In some states, you can still drive that car on a salvage license.