Should I keep my old car?

Before you go searching for that temporary high that comes via the purchase of a new car, stop, think and consider whether such a purchase actually is the correct call for you. While the search and purchase of a new car is an exciting journey, is it the right journey to be on?

We rely heavily on our cars and we all want to own and drive one that is safe, reliable and doesn’t cost too much. However, it’s not a good idea to make a rash decision about buying a new car when a problem arises with the old one.

No car is immortal, we all know that. Eventually, they will need some love and attention, but if you keep on top of the servicing and maintenance requirements, you should easily get 160,000km out of a car without any significant expenses. The timing belt, tyres, brakes and suspension components will likely be the most costly repair or replacement items to arise, assuming your car has been looked after and you didn’t buy a lemon in the first place.

Recognising that your old car will need some TLC as it ages makes sense. And so does planning ahead. Expect certain things to fail with wear and tear and decide beforehand what the decision will be when those inevitable problems occur.

Planning ahead

Acknowledge that new cars are usually more expensive to insure, will incur sales tax (and possibly the luxury car tax) and, if it has a larger engine, could cost more in rego.

Calculate if repairs on an old car will cost more or less than new car repayments. If you need to get a loan for a new vehicle, the monthly repayments may outweigh the costs to maintain an old car. A new car depreciates in value by around 22% in the first year and some financial advisers suggest that you should not spend more than 22% of your net pay on new vehicle costs. A common practice is that if repairs on an old car cost less than half the market value of the car then keep it. If they’re more, get rid of it. Obviously, if the car is at the mechanic's every month with chronic mechanical problems then it is probably time to cut your losses.

There are other questions to ask yourself too.

• Do you have plans for the car? Is it going to be handed down to a child or do you have an emotional attachment to it? Perhaps you’ve given your car a name and you can’t imagine life without it! If that’s the case, then a new car will probably not satisfy your needs.
• If you drive in uncertain conditions and have a long commute, reliability will be important. The same goes if you rely on the car to transport your children. A vehicle that’s off the road and in the shop is inconvenient at the best of times. Perhaps it’s worth paying the extra for a new car?
• Perhaps you're driving a large vehicle and looking to reduce fuel costs? Maybe you’ve become more environmentally conscious and want to do a little more for the planet? A modern car with lower fuel costs and lower emissions could be the answer. Perhaps it might be time to look at an electric or hybrid vehicle.
• How long do you need the car to keep going? Maybe you need to hang on to your current car to save money so you can afford the next one. Get multiple quotes for repairs instead of relying on just one. AutoGuru is a great place to find the highest rated mechanics in your local area at the best rates.
• Why do you want to upgrade? If it’s to keep up with the Joneses and/or you love the allure of having the latest gadgets and a shiny new car, then your hunt for a new car is a ‘want’ rather than a ‘need’. Nothing wrong with that, of course, but remember that everything new becomes old and it won’t be too long before that delightful new-car smell fades and you get the first ding or scratch.

New car pros

• More reliable
• Updated gadgets
• Up to date looks and style
• Lower fuel costs

New car cons

• Depreciation
• Repayment costs and interest
• Higher insurance costs

Old car pros

• Knowledge of service history and mechanical issues
• No monthly payments or interest
• Don’t need to worry about dings
• It’s part of the family

Old car cons

• Higher maintenance costs
• Higher fuel costs

If your decision is to purchase a new or second-hand car, try to pay cash and consider vehicles under five years old, with less than 100,000km on the clock and is in good condition. Remember, cars depreciate rapidly and are not an investment.

There is something engaging about a car owner who holds onto and looks after a car and doesn’t just toss it away when it gets old. If you look after something, it will usually look after you and make it all worthwhile.