With rising fuel costs and the cost of vehicles higher than ever, is it worth replacing your vehicle right now?
There are costs associated with upgrading your vehicle and keeping your old car on the road. Your decision will depend on your current circumstances, including your budget, lifestyle and preferences.
What’s certain is that assessing your vehicle needs every few years is a good way to ensure your vehicle is serving the right purpose. After all, while it costs money to upgrade your car, it also costs money to keep upgrading an old one. Newer cars perform better with fuel efficiency but if you’re working from home more and not using your vehicle often, fuel economy isn’t the be all end all. So, what are you supposed to do?
The best thing you can do right now is assess whether or not it's worthwhile upgrading your vehicle. Here are the points you should consider when upgrading your vehicle. These questions will help you decide whether now is the right time to upgrade your vehicle.
If your car needs a lot of repairs, it can make the decision to upgrade your vehicle a lot easier. Cars depreciate year after year. If your repairs are a high percentage of the total value of your car, it may be time to upgrade.
If you’re on a budget, paying for repairs might be better than spending tens of thousands on a new-to-you car. Even costly repairs are sometimes more ‘affordable’ than saving up for a new car. Think about:
How much do you expect to spend on repairs each year? While you want to avoid the sunk cost fallacy, if you spend $1,000 on car repairs year after year, its safe to assume that number probably won’t go down the longer you have your car.
How much you can expect to get if you sell your vehicle?
How much you can expect to get if you trade your old car for a newer model? (This number is usually less than the amount you’ll get selling your car privately, but also takes more time and effort on your behalf.)
If you’re car has too many problems and is unsellable, how much can you expect a wrecking yard to buy it for?
How much a new car will cost you to buy?
How much your car currently costs you to run?
After researching annual repairs and running costs, you should have a clearer picture of your current vehicle's cost. Other factors to consider are the time and stress that repairs cost you emotionally. While it might be cheaper to hold onto your car, consider whether it’s really worth the hassle of taking your vehicle to a mechanic every six months.
If your car runs well but is starting to age, you might wonder if it’s worth trading in. There are advantages to trading in your car before it's considered an older model.
In New Zealand, the average age of a passenger vehicle on the road is 14.1 years. That’s quite a bit older than most cars on the road in the UK and the US.
Trading in your vehicle before it reaches the 14-year mark is a great way to ensure you’re locking in some of the value. When buying second-hand, most people want to own a car under 15 years old. If your vehicle is 10 years old, it's a good idea to start thinking about trading it in so that you can ‘upgrade’ your vehicle and not have to sell it for a very low price.
Another reason for upgrading your vehicle is trading your existing vehicle for something that’s easier to repair. This isn’t as simple as owning a newer versus an older car. Some older cars are easy to repair, while some newer models are more difficult to repair because of their electric components.
In New Zealand, older Japanese imports are very common, with plenty of parts. This means repairs are usually cheaper on Japanese cars because the parts supply is high, and mechanics know how to fix these cars.
European cars are usually more expensive to fix as there are less of these types of cars in New Zealand and, therefore, fewer parts. Mechanics usually don’t have as much experience working on European cars. Upgrading your European car to a more reliable Japanese model could save you money in mechanic visits in the long run.
Upgrading to a brand-new car comes with its own set of difficulties. New cars have complicated electronic components. Many new cars require mechanics to source their parts straight from the manufacturer. This adds to the cost of repairs.
One major benefit of upgrading your car is for safety reasons. Newer cars are much safer than older models, and it's hard to put a price on safety. If your vehicle is over 15 years old, its not as safe as it could be.
Upgrading your car every five years will benefit you from new safety features and ensure you are well protected in a crash. If you worry about the safety of your car, upgrading to a newer model can give you peace of mind.
If your car breaks down a lot or is unreliable, you should also consider the emotional toll this can take on you. Dealing with breakdowns or constant repairs is stressful and will cost you time and money.
If you spend a lot of time in your car, you could benefit from better driving features. Newer cars are equipped with infotainment systems, and reversing cameras, are compatible with the apps on your phone and give you many more features that make driving more comfortable.
Given how much people rely on their phones, using in-built features like apps or GPS can make your driving experience a lot safer.
The final reason you might explore before upgrading your car is whether or not its expensive to run. Older model vehicles aren’t as fuel efficient as new cars and upgrading your vehicle could save you a considerable amount at the pump.
Once you get over the initial cost of financing a newer car, you might benefit from spending less on petrol or maintenance each year. This is especially true for electric vehicles. While the initial cost of an EV is relatively high, you’ll pay very little to recharge your vehicle, plus there are no moving parts to worry about fixing.
While there is no ‘right’ time to upgrade your vehicle, you may want to upgrade your car if it is:
Approaching the 15-year mark
Costing you thousands in repairs each year
Expensive to fill up with petrol
Lacking the latest safety features
Hard to find parts for
Outdated, unreliable or uncomfortable to drive
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