Time to Buy a New Car

For many people, it’s difficult to let go of an old vehicle. They often hold a lot of sentimental value. Maybe your car has even been good to you over the years, never dying on you when you need it or costing too much in repairs. Unfortunately, every car has its day, or at least reaches a point where a repair costs more than the car’s value. Here are some signs you may need a new car and how to find out if you can afford it.

Reasons for a New Car

• Are you constantly being forced to get repairs done on your old vehicle? Older vehicles are bound to need repairs, but if you’re shelling out over $200 a month on a regular basis then you might as well be making a new car payment. Also don’t make any major repairs such as a new transmission or engine before thinking about how you could put that money toward a new car.
• For many people who have held on to their older vehicles, there comes a time when their car no longer fits their lifestyle. For instance, driving a 2-door coupe doesn’t make much sense when you have a family of four. Nor does taking up a hobby like hiking or camping in your sports car.

Can You Afford a New Car?

Here’s a simple test to find out if you can afford to purchase a new vehicle – simply estimate the amount of money you think you can afford each month and then attempt to save that much for three months. After the three months is up, ask yourself these questions.

• How difficult was it to save that money? Did you have to make major sacrifices or make the bare minimum payments on your debt? Keep in mind that life likes to throw surprises at us so make sure you have some left over for emergencies.
• Taking into consideration how difficult it was to save the car payment money each month, would you still be able to afford a new insurance plan and all the fees associated with a new car?
• If you continued to save for another year or two, how much money would you accumulate? You might be able to save enough to pay cash for your next vehicle, which could save you thousands in interest.
• Would you be better off just having that money for yourself each month? It could probably help pay for a decent vacation, new computer, or anything else you might be in need of.

Additional Resources

• Buying Advice
• Is Now the Best Time to Buy a Car?