Editor's choice: CarsDirect auto loans
- Bad credit OK
- No-fee service
- Get connected to flexible lenders
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our opinions or reviews. Learn how we make money.
Replacing your old car could mean a new monthly bill and higher insurance premiums, but picking the right car can cut those costs down.
At some point, the cost of owning and maintaining an older car might outweigh its value. It’s nice to pay off your car and no longer have car payments, but having to rely on a car that’s increasingly unreliable can be stressful and expensive.
Trading out your old beater for a new or new-to-you car might sound pricey, but it’s not always more expensive after the initial upfront cost. Consider some of these cost factors before making the decision to upgrade your ride or not.
Statistically, newer vehicles are safer. They benefit from modern advancements in body design, autonomous safety technology and driving aids. Plus, an aging car’s crash safety could be weakened by rust. If your car is rusty, you could have a 20% higher risk of dying in a crash.
Cars for sale today carry plenty of equipment that was optional or unavailable in the past. It’s not uncommon to get phone connectivity, steering wheel controls, cruise control and electric windows as standard. All automakers are now required to include backup cameras by default.
In addition to keeping you safer in an accident, these safety features and anti-theft devices often get you discounts on your car insurance.
New cars benefit from a manufacturer’s warranty, and they’ll usually have fewer recalls than older cars.
But as a car ages, it will begin to degrade. Things will start going wrong, rust will set in and you’ll find yourself becoming familiar with the mechanics at the local garage.
Gas is the second largest expense that car owners have to shell out for. Thanks to lower-capacity engines, start-stop systems and eco-modes working in tandem, a new car can dramatically slash your fuel bills.
Older cars that aren’t maintained properly can also suffer from decreasing gas mileage over time.
If you’re considering a newer car and want to maximize your fuel use, hybrids and electrics are cheaper than ever, even for many slightly used models.
If you haven’t paid off your current car, things can get a little tricky. You need to make sure that selling your old car or trading it in will cover the remainder of your loan. Otherwise you’ll be on the hook to pay off the remainder to your lender.
Don’t forget to factor in any early settlement charges or fees.
New cars with the same level of insurance can be cheaper to insure than older models. You’ll benefit from safety discounts and anti-theft discounts, which could save 5% to 33%
However, getting a new car usually means you’ll be upping your coverage. A lender for a loan or lease may require you to have comprehensive insurance, which could increase your annual premium if you previously had liability only.
Insurance rates depend a lot on the make and model of the car you’re switching to. If you’re upgrading from a $5,000 used minivan to a $50,000 luxury SUV, your insurance rates will probably go up. But if you’re upgrading from a used sedan to an almost new sedan, your rates might not go up that much.
Save on new car insurance by being smart with extra features and discounts.
If you find that your car has a track record of reliability and is cheap to run, then it may not be worth upgrading from a financial point of view.
But if you’re starting to see more maintenance costs on your older car, calculate how much you spend per month fixing your car. You might be better off using that money on a new car payment and using your car as a down payment for a new car. If you don’t relish the thought of buying new, a slightly used but more reliable car could be the way to go.
You can also keep track of your car’s value over time. If your car faces a big problem that will cost more to fix than it’s worth, you’ll have to decide if you want to put in the cash to repair a dying car and guess how much more maintenance it will need in the future.
Keep in mind that your car’s value is also tied to its working condition. You might be hoping to drive your car into the ground, but trading in your car before it dies could give you some money towards a new or new-to-you car. It could be hard to find a buyer for a car that won’t run or needs major repairs.
If your car’s still got its best years ahead, don’t take on a loan you can’t afford just to upgrade. On the other hand, if your car breaks down every other week and practically has a custody arrangement with the local mechanic, keep yourself safe and save money by upgrading to a newer vehicle.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.