If your car is hurtling towards its use-by date with an odometer in the hundreds of thousands, you may be wondering if it’s worth trading it in for a newer model. However, if you feel a new car might cause undue strain on your budget, the other thought is to keep your daily ride until it “drops.” So what’s the best option?
Gathering evidence: what is your car worth?
The first plank in making your case to keep or ditch your car is figuring out how much it is worth. You should research the current market value of your car by looking at car dealerships and private sales online. You can also look at your current insurance premium for more information. For example, a “market value” policy will show you how much your insurer will pay out if you write your car off.
TIP: Redbook.com.au is one of Australia’s trusted guides to car valuations.
More evidence: how much would it “cost” to sell?
When determining value, you must also factor in the condition of your car – many dealers and buyers might knock thousands off the sale price for dents and scratches on the paintwork, for example. To regain that value, you may have to invest in a cut and polish or a paint retouching. Cracked and torn seats, parts reaching the end of their life (like a fan belt for example), and electronics not working all shave down the value of your car. If you wish to sell or trade-in, it is your responsibility to fork out for the repairs, which may not attract a return on the investment ( read our top 10 tips when your car doesn't sell).
The case for keeping the clunker
With all this in mind, keeping your old car makes sense if it still drives well. If you keep your older car, you won’t have to worry about monthly repayments on a car loan as time goes on. If you don’t mind cosmetic blemishes on the outside, leaving them be doesn’t cost you anything either (read our top tips to extend the life of your car). As the value of your car decreases, so does your insurance premiums. The only major worries are replacing parts that will eventually wear out. Of course, after a few (maybe even 10 or more!) years, you WILL have to buy something newer.
The case for trading it in
Trading in a working vehicle in reasonable condition is a sure-fire way to get into a new car for less money. A trade in is much like a deposit on a newer vehicle. Of course, the new car will have better features, higher safety ratings, and improved technology including fuel economy. Of course, you need to factor in all new costs such as registration, yearly maintenance, petrol, car insurance and of course, the regular repayments if you need to take out a car loan. Remember to know your vehicle’s worth before negotiating with a dealer.