Your vehicle has carried you over miles of daily commutes, road trips and so much more. How do you decide if it’s better to fix up or trade up? Here are some key questions to ask:
What does your vehicle actually cost you?
Even if it’s paid off, you’ve got gas, insurance, and maintenance to consider. Total up the last year’s worth of spending on all three, plus any taxes or fees, and divide by 12 for your average monthly vehicle costs.
Does it need an expensive repair?
Just one doesn’t necessarily mean it’s trade-in time. Two repairs close together may. Ask your mechanic for an honest evaluation of current — and potential future — issues. Compare total repair costs and outcomes with what a new vehicle would run you monthly (see below).
What’s it worth?
Enter your vehicle’s information on a free trusted website, such as Kelley Blue Book, Edmunds or the National Automobile Dealers Association, to find out how much you’d likely get if you sold it or traded it in. Consider that number in relation to any big-ticket and typical annual maintenance costs.
Does it feel safe?
Do you worry about your vehicle breaking down on the road or often feel unsafe as you drive? Newer vehicles come with many fantastic safety features, from advanced airbags and better handling to backup cameras and lane-departure warning systems. Peace of mind is valuable.
What would a new vehicle really run you?
Research your next vehicle. Look at price, minus any trade-in value or down payment, and figure out your potential financed monthly payment. Add in estimated monthly fuel costs, insurance and fees.
Compare this monthly payment to your current costs for a clear picture of the difference and its impact on your budget. If it’s just too great, consider setting aside whatever you can afford monthly in a vehicle fund for surprise repairs or a future down payment.
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