Car owners don’t always have flexibility when it comes to replacing a vehicle. However, if your car is running well, but you want a new one, here’s what you should think about before you decide to take out your next loan.
Before you decide to trade, you should use an auto loan calculator to determine what you’ll be able to afford in payments. You can also use a down payment calculator to determine how much you should pay upfront. After all, your down payment reduces the amount you must borrow and can even impress your lender enough to help you get better interest rates.
Check the Automotive News
Most recently, automotive news has made it clear that used cars are fetching a premium price when traded. However, that same news shows that a higher trade-in price has led to higher prices in used cars. This is due to some shortages in new car parts due to problems caused by the pandemic. This is the way it is as this article is written, but it could change and change quickly. It helps to know what’s going on in the market to know whether you can command a good price for your trade.
The Age and Mileage of your Car
This is the biggest and most important aspect of deciding whether or not to trade. There is a point at which your car will not be worth as much as it is today. However, a new car has already appreciated considerably and, at the five-year mark, it may hold steadier. As such, you need to evaluate your mileage and divide it by the number of years your car has been driven. The ultimate mileage per year is 10,000, with 15,000 being the most likely.
If your mileage is approaching 75,000 and you’ve only owned the car for about three years, then the buyer will see that it has been driven hard for 25,000 miles a year. On the other hand, if you keep the car for another two years and put very few miles on it, you might be dividing 80,000 by five. Suddenly the car looks like it hasn’t had rough years. Yearly mileage would work out to only 16,000 miles per year.
Repairs and Maintenance
Another way to determine if you should trade your car is to calculate how much repairs are costing you. You may be spending as much to keep an old car running as you might to buy a new one. The trick is to save up for that downpayment before trading your car.
On the other hand, perhaps your car isn’t constantly being repaired. You have done what maintenance is needed, perhaps bought new tires, and done the other things that keep a car on the road. Why should you sell it? You can get more out of driving than you’ll ever get trading it in.
What Does It Look Like?
If your car has been in a wreck, you are unlikely to get a good price from a dealer. This is a good reason to keep driving it as long as you can. Even when repaired beautifully, the repair records are often available to a prospective buyer.
Perhaps your car is in perfect condition inside and out. You can get the most out of your trade (assuming it has the right mileage and a good repair record) at that point. It wouldn’t hurt to ask a dealer what they’d pay for the car. There are online evaluation tools available, but be careful to use one by Kelley Blue Book.
With mileage, condition, repairs, and the marketplace to consider, you’ll be able to come to a good decision regarding trading your car. If you don’t have enough for a good down payment, remember to save up before making the trade.