If you’re debating on trading in your used car for a new one, odds are its cheaper to keep your used car. There’s a running joke among bankruptcy attorneys – that our clients tend to drive nicer and newer cars than we do. Just like everything in life – there is some truth to that.
Cheaper To Keep Your Used Car
The most common justification that I hear from clients is that they need a reliable vehicle, so it is more cost effective to buy a new car under warranty. The idea is that the monthly car payment will be cheaper than ongoing maintenance plus the inconvenience of having a car in the shop.
Are You Underestimating The Reliability of Used Cars To Justify Purchasing a New One?
What is often overlooked is that a majority of used cars are extremely reliable nowadays. Maintenance intervals are getting longer and parts tend to wear out less frequently. Oil changes used to be required every 3,000 miles and engines would typically give out at about 100,000 miles. This simply isn’t true anymore – and hasn’t been for a while.
Maintaining your car is probably cheaper than buying new.
If you are living on a shoestring budget, you should also take into consideration the hidden cost of insurance and vehicle property tax. Most secured creditors will require full coverage on a vehicle. If your car payment is $300 per month, you need to calculate the monthly cost of full coverage insurance as well. It’s not unreasonable to estimate $80 – $100/month for a new car. If you have less than stellar credit, expect to pay a higher premium. Your credit score does impact your insurance premium.
The cost of tagging your new vehicle may also surprise you. It could be several hundred dollars the first year, decreasing every year as the car ages. Divide the cost of the yearly tags by 12 months to get your monthly cost. A $26,000 car will cost about $365/year to tag in Kansas (See HERE). That’s about $30/month.
If It’s NOT Cheaper To Keep Your Used Car
If your car is on it’s last leg and you really need a reliable used car, the best bang for your buck is to purchase a Honda or Toyota. The Toyota Corolla is probably the most reliable vehicle on the road and a used one can be had cheaply. It will cost more than a comparable Dodge and you may have to get one a few years older than you wanted with less fancy features, but it will save you down the road.
If you are still hung up on a new car, try to determine whether you simply want a new car, or whether you truly need one. Humans are experts at rationalizing and bargaining with ourselves, and it can be difficult to recognize the difference between want and need.
If you are stuck with a car you can’t afford, please give us a call at 785-727-7700 for a FREE Consultation over the phone, in person or you can email us now. Chris W. Steffens is a Kansas Licensed Bankruptcy Lawyer