When is it time to upgrade your car?

Posted by Ben Davidson about 2 months ago

While consumers are now upgrading mobile phones and other connected devices on a bi-annual basis, a recent study by Time noted that this is usually not the case with vehicles. It found that car owners are planning to keep theirs for at least ten years, while the average car on the road is more than a decade old. That suggests the average consumer is more concerned with repairs and maintenance rather than buying new, but there is a range of factors to consider when making a decision.

Wear and tear costs

Repairing a car is usually cheaper than buying a new one, but you need to weigh up the potential long-term costs carefully as numerous repairs can be expensive. Excessive wear and tear can cause hoses and rubber belts to crack, electrical parts to fail and rotors to warp, and it is inevitable that axle boots, brake rotors, and belts will need replacing eventually. Some repairs cost more than others. For example, the timing belt often needs replacing after 70,000 miles costing car owners up to $1,000 because it is often included in a water pump and drive belt replacement package.

Whether to repair or not

Problems with wear and tear and fuel efficiency are likely to surface when there are 90,000 miles on the clock and upwards, so you will be faced with a decision about the future of your car at this point. A great method for arriving at a quick decision is to calculate the total repair costs and compare it with the value of the vehicle. If the cost is greater, you should think about upgrading to a new car as the costs associated with repairs and maintenance are no longer worthwhile unless you have a sentimental attachment to the vehicle or want to hand it down to another member of the family. 

Depreciation

Depreciation is another major factor to consider and is perhaps the strongest argument for trading up quickly and buying new cars. “There isn’t a particular age where the depreciation and value curves combine at their most beneficial,” CAP used price guide forecasting editor, Dylan Setter says. “Cars do most of their depreciating in the first nine months. But if you’re looking to sell a car to trade up, you want to sell it when it’s relatively new because the younger a car is, the more it’s worth.” This advice suggests that preempting wear and tear and looking to recycle cars more quickly may be best overall. 

Mileage timeline

As noted earlier, problems begin to manifest around 70,000 miles, but the need for a new timing belt may not be the only repair needed at this stage. You may have to budget for new brakes and tires too. If you don’t want to sink any money into maintenance, then you should consider selling before this stage is reached. The next major milestone is 100,000 miles on the clock, and you can expect your car to drop in value significantly after that. 

How to upgrade

If you have finally decided to upgrade, you can explore the financing options available to you. Whether you have your eye on the 2018 Subaru WRX STI, which is expected to retail under $40,000 in Canada, or prefer an SUV such as the Ford Escape, you will need to consider funding and whether you want to buy outright or secure a loan. A great option for Canadians is auto loans because it is possible to get same day approval and competitive interest rates and access a 30-day vehicle exchange program.

Buying used

If you plan on buying a used car, you must take more than mileage and age into account before purchasing. You obviously don’t want a vehicle with many miles on the clock, but you should also factor in the vehicle type, previous owners, and maintenance types. A vehicle with city miles is likely to be more susceptible to damage in the near future than one with highway miles, while a car with a previous fastidious owner taking care of issues as and when necessary is a better long-term prospect. 

Buying new

Depreciation is a key factor when buying new as a car worth $20,000 can go down in value by around $12,000 in five years and by as much as 25 percent in the first year. Buying new is best if you don’t want to consider any form of repairs in the foreseeable future. You will also be able to purchase a vehicle with the latest safety equipment such as blind spot monitoring, backup cameras, and electronic stability control.

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