Did you know that just a few car buyers want to change their car because they want a new model? Most of them actually do it because their vehicle is nearing the end of its life cycle or is too costly to repair.
And this is perfectly rational behaviour. You should change your car if and only if it’s more economical than keeping it. But when is the car at the end of its life? And is it really cost-effective to wait for that long to replace it?
The older the car, the costlier breakdowns are
Generally speaking, the older a car gets, the more expensive it gets to maintain it. As the vehicle progresses in mileage and age, all its parts also reach the end of their lives, and more especially the expensive parts.
Just to give you an example, the computer-controlled vehicle system, which has ever-increasingly been part of our cars, has a replacement cost ranging from 900 to 1,800 New Zealand dollars (NZD). The result of keeping an old car is not only that it’s expensive to fix, but also that it will have frequent breakdowns. Your car budget will burst, and your car will constantly be in the workshop. Think about all the troubles you’ll get in if you need your vehicle daily…
Also, keep in mind that keeping your old car definitely won’t increase its resale value. You won’t be able to resell for 5,000 NZD a car whose resale price is 3,000 NZD and on which you had 2,000 NZD worth of car battery replacement. Potential buyers do not pay for recent repairs. On the contrary, knowing that the car is having issues can deter them from buying.
So, to avoid falling into this trap, you should be ready to spend a substantial sum to purchase a more reliable car —unless you don’t need a car at all.
Replace your car at the right time
It’s always better to replace a car without waiting to do it at the last moment. To find the right time, you must assess its current market value and calculate the costs of upcoming repairs. Proactive maintenance will help you pass on the resale price way more than big repairs.
Make sure that you ground your decision on reliable facts, rather than take your chances based on information from magazines or Internet sites. You can also ask an expert to assess the value of the car, with a complete description of its state (mechanical and bodywork), at a cost of around 250 NZD. A mechanic who you trust can also give you good advice.
The last factor to integrate into your strategy is the amount to invest to replace your car. The calculation is pretty straightforward. It is the difference between its market value and the price of a new car. Try to identify the best moment to put your car on the resale market and buy a new car. Depending on specific discounts of a car dealer or a concessionaire, or a government scheme like clean car bonuses, the timing of the sale and purchase is key.
A few signs can tell you when you should scrap your car
Three main signs indicate that your car should be sold. Most experts will tell you that you should start getting worried when the engine fails, the transmission breaks down, and the body starts to crumble.
Firstly, a dying engine usually means that will have other and equally serious repairs to take care of, such as transmission —and vice versa. This is the best indication of advanced degradation and whether you like it or not, the decay will continue its work.
Tell yourself that no matter what you invest in your old car, you won’t get much more out of. And that anyway, it will be necessary to leave you, one day or the other…
Another sign of decay is when the bodywork goes awry. And under it, the chassis that breaks down. Trying to have your car repainted? Resist the urge. This is an unnecessary expense that is costly and does not bring anything to the value of your vehicle, as experts confirm. Is the chassis broken? Again, do not think of repairing it. And forget transmission repairs. It would be like installing a beautiful new dentition to a terminally ill patient…
If you wait for too long, and your car can’t be sold anymore, just keep in mind that you can’t leave an old car anywhere. It must be entrusted to an approved company. The service is usually free, provided you deliver a complete vehicle, that is to say with its essential components, including the engine, the catalytic converter, and car upholstery… Sometimes, you can get cash for car, but more often the towing to auto dismantlers is the responsibility of the owner.
Change your car every 3 or 4 years
If you don’t want to get into that kind of expensive headache and call on costly car service deals, you can adopt a simple strategy. That is buying a new car and not keeping it for more than three or four years while subscribing to a maintenance contract for this period or even an extension of warranty (transferable with the car). By doing so, your budget will probably not be completely optimised, but it will be solid, with a minimum of uncertainties.
You can, of course, maximise your budget if you keep your car a tad bit longer. But that is only if you can make a reasonable bet on the durability and reliability of your car, and give it regular maintenance.