While a car is a big purchase, it’s generally not something people keep forever. Most people will own a few cars over their lifetime.
People will often upgrade to a new car once the current one gets too old or breaks down, however, if your car is still in good condition, it can be hard to know whether it’s the right time to upgrade, but there are a few factors to consider that may help you make your decision.
One of the best times to upgrade your vehicle is when your needs change. Your lifestyle is likely to have changed since you first got your vehicle, and circumstances such as a new job or a growing family may mean it’s the right time to upgrade to a new car.
Your car should suit your lifestyle needs, for example, if you have kids, you’ll likely need a bigger car with space for car seats, prams and all the other stuff children need. Or, if your job involves a lot of driving, a comfortable car with better fuel efficiency may be a better fit for you.
Being realistic about what you, and your family, need from your vehicle can help you decide whether or not it’s time for an upgrade.
When budget allows
A car loan helps make buying a vehicle more affordable, but it can still depend on your budget for the type of vehicle you can afford. If your financial situation has improved you may be able to afford a better car than your current one.
Calculate the loan repayments and costs of a new vehicle to ensure you work out what suits your budget. While it may be tempting to upgrade to a fancy new car, you need to consider your budget carefully and what you can afford to pay.
Find out the current value of your car to see how much you may be able to sell it for. This money can then be put towards paying off your existing loan or putting down a deposit on your new vehicle.
Cars depreciate quickly, which is an important factor to consider if you’re planning to sell or trade in your car.
If you’re thinking of selling your vehicle, you want to do so before the resale value drops too low. A car will typically lose up to a third of its value at the three-year mark and then will depreciate at a slower rate after five years.
Pay attention to the market value of your vehicle, as upgrading your car before it’s too late is the best way to avoid being left with a car with no significant value.
Safety and maintenance of your car
The age of your vehicle can impact its safety, as unless you’ve made modifications to your vehicle, older cars will not have updated safety features.
Car tech continues to progress, which means newer cars benefit from updated technology and safety features such as airbags, reverse cameras, and sensors. These can make driving safer and easier. The longer you stick with your old car, you’ll miss out on the latest safety features.
Something else to consider is that the older your car gets, the more expensive repairs and maintenance are likely to be. If your car is no longer under warranty, it can become uneconomical to pay for major repairs, as it can cost you more than the car is worth. If this is the case, rather than paying costly repairs, you may be better off upgrading to a new car.
The loan term has ended
While you can sell or trade in your vehicle while it’s still under finance, it can sometimes be much simpler to wait until your car loan term has ended.
Car loans range between 1 – 7 years. If you have come to the end of your loan or have paid off your car, it might be a good time to consider upgrading to a newer vehicle.
The right time to upgrade your vehicle can depend on various reasons, such as those mentioned above, and it will be different for everyone. If you’re considering upgrading your car, the team at All Loans can help with the financing.