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Many times we come across situations when our car stops working and we are left stranded in the middle of a road. This is not just inconvenience but an alarm also that it is the time to replace your car. However, changing the car is not always easy as it seems like. You have to compare the probable costs of buying a new or replaced car with that of car repair.

The Costs of Repair

Before you jump into buying a new car, you have to assess what your current car costs. It is the ideal approach to follow. The fixed costs of your car include your registration, insurance premiums, vehicle taxes, fuel costs, and repair & maintenance costs.

The ideal thing to do is to go through the repair records of the past year. If you have spent somewhere around $1,500 to $2500 on your car, you should realize that you are paying $200 more than what you should be paying. That is a big amount of money. However, if you opt for replacing your car, the car payments can cost more than $300 each month. That is the reason why people prefer getting the car repaired.

Moreover, maintenance and repair costs of the car when added to the fixed costs of the car can help you determine precisely what the actual expenditure of your car is, each year. If you have to use your car daily, it is highly likely that you will be adding thousands of dollars on top of your maintenance and repair costs of your car. This figure combined becomes the annual cost of maintaining your car.

What is the Value of Your Car?

Since you now know the actual costs of maintaining your car, you need to determine what the worth of your car is. Thanks to online platforms, you can get an estimate of your car’s value. If you prefer, you can also visit some different companies dealing in used cars. The estimate of your car’s value will have a huge impact on your decision to sell the car or trade it in.

Analyzing the Difference

At this point, it is now obvious that replacing a car, either by a selling or trading in, is expensive than the costs of repairs. However, there are some other costs as well that can affect your decision of buying a new car or replacing with some other previous models. If your car is regularly demanding repairs, and mostly causing inconvenience, it is the time to change it. Even the costs may be higher, but these are not worth the time you waste by standing stuck on a road. It is a wise decision to make that if the repair, maintenance, and operating costs of the car are exceeding its value, you have to buy a new one.

Your Budget and Financial Canvas

The best time to buy a car is only when you have the required finance to do so. You have to establish a monthly budget to determine how much you can afford in the monthly payments. If you opt for trade in, you might have to pay the additional amount upfront.

However, if you prefer to buy a new car, you need to know that the lenders will review your credit history. Before you begin shopping, having a know-how of your credit score is important. A credit score is a three digit number that can be obtained by visiting MyFico.com. The higher your credit score is, the greater are the chances of getting the loan approved and that too, at favorable interest rates. The credit score of 700 or more is considered as good credit management. Before you move on to take a loan, it is vital to have a particular car in mind to know what it will cost you to buy that car. For example, a new car that costs around $20,000 represents the cost. Next, subtract the amount you would receive for selling your car say $2,500 and a down payment of say $500. That leaves you to acquire a loan of $17,000 for your new car.

A loan of $17,000 at 5% annual rate of interest for 5 years would cost you somewhere around $320.81 monthly. If this is higher, you can either pay more money as down payment or acquire a longer loan. You can also consider another vehicle with more or less the same specifications but lower in cost. Furthermore, you also need to get a quote for the insurance to ascertain the insurance premiums. Please note that the insurance premiums can be controlled with a car having improved fuel economy. Buying a new car means your repair and maintenance costs are also going to be covered under warranty for the first two to three years of ownership.

Final Verdict Regarding Your Decision

At this point, we have reviewed the practical reasons for replacing a car. It is quite valid that not every purchase decision is practical and possible. For most of the shoppers, buying a new car is only because of need not want.

There can be a number of reasons why you need to buy a new or another car. The reasons can include achieving better fuel economy, experiencing new features, or the look of the car. Whatever the reason is, everybody has a wish to drive the newest model in the market.

Adding It Up

We have analyzed the setbacks that determine whether or not getting your car replaced with a new one is beneficial. Consideration will be built largely on your ability to afford another car or maintain your present vehicle.

There is one final factor to keep in mind: the inconvenience and cost of having your car in the shop. For some, the wages lost from missing work should also be considered as it may put your job at risk.