- Ask yourself these 3 questions to make sure trading in your vehicle is the right thing to do. Consider whether or not you NEED a new car or you just WANT a new car.
- Is your current vehicle still in working order? If it gets you from point A to point B with no fuss, it may not be time to trade it in.
- What are the trade-offs in regard to cost? After taxes, fuel-efficiency, and insurance are calculated, are you saving more or spending more?
- How will my bank assist me with my trade-in? Look into how your credit may be affected as well as the interest rate of your new vehicle.
Maybe you’ve had your current car for more than 5 years and it’s completely paid off, but you’re scratching for something new. As you’re getting ready for a night out with your friends, the latest car commercial grabs your attention. Your demeanor changes and all you can think about is trading in your current vehicle for a new one.
First, finish getting ready. You don’t want to keep your friends waiting. But second, trading your car in is certainly something to think about. You’ve taken your current car into the shop far more often this year than in the past and it may just be time for something new. Consider these following 3 things before making the trade.
Consideration #1: Is My Current Vehicle Still in Working Order?
Give your self some time to mull over the idea of taking in that fresh new car smell. Ask yourself the question, “Have I gotten the most out of my car?” Create a list of minor and major issues or problems that your current vehicle is dealing with.
Ask yourself additional questions. Does it get me from point A to point B? Is it safe for myself and others? Are the issues I have purely cosmetic? Am I being impulsive? These are all important things to ask yourself before trading in for a new car.
Consideration #2: What Are the Trade-Offs in Regard to Cost?
There are many factors other than trade-in value and sticker price that you’ll need to contemplate. Compare the fuel-efficiency of a new vehicle with your current one. You may be getting a decent trade-in value, but if you’re spending a significant amount more in fuel with a newer vehicle, those savings quickly disappear.
Look into the difference in insurance per month/year. Depending on the year, make, and model of your potential new vehicle, your insurance cost may increase exponentially. Certain states have particular taxes due each year that you’ll want to include in your cost analysis as well.
These “other” fees aren’t technically considered “hidden fees” but they sure do evade the calculator when trying to make an accurate assessment of when/if it’s a good time to invest in a new vehicle.
Consideration #3: How Will My Bank Assist Me With My Trade-In?
Unless you’re swimming in extra cash, you’ll more than likely need to take out a loan in order to purchase a new vehicle. Although you may receive cash for your current car, it won’t cover the entire purchase.
Visit your local financial institution and get pre-approved for a new vehicle. Usually, this is necessary for much larger purchases like a house or land, but knowing your estimated interest rate and budget will help you make a more informed decision.
You may find out that you can improve your credit rate by doing things differently over the next year, so holding off on a new car would be very beneficial. The interest rate for your new vehicle is where people often get trapped. It’s hard to refinance for a lower rate and it may even negatively affect your credit.
Get the Whole Picture
The main objective is to understand the entire picture as you consider whether or not to trade in your current vehicle for a new one. Exhausting all of your options and having a plan will allow you to make the best decision.
One final bonus tip would be to shop for a new car during the last quarter of the year (Oct-Dec). You’ll more than likely find a better deal as car lots are looking to make room for next year’s models. You could score a great deal!