4 Reasons We Rush Into Replacing Our Cars

Posted by The Happy Rock on September 26, 2007

Got an old car that is giving you problems? Scared that your junker is going to leave you stranded? Well, then you might be struggling with the question of when to let go of the old car and get a new one. It is a question I often see people struggle with, and one that people seem to make decision based on emotion or to justify their desire for a newer car.

Deciding that your current set of wheels is more hassle than it is worth isn’t an easy decision. I am not even sure that there is a correct answer, just like most personal finance questions it is a very personal choice. But let’s look at the top few reason people ditch their old cars two quickly.

The biggest mistake is to quickly ditch a car at the first major repair. If the car is in reasonable shape, it will almost always be cheaper to fix the car. From the outside it also seems that they are using the repair bill to justify our underlying desire to drive a better car. Evaluating our materialistic side and keeping it in check is a big key to making a wise decision.
We need to dispel our irrational fear of the car leaving us stranded. I have had it happen a few times, and it is not that big of deal. Today in the age of cell phones, you won’t be sitting helpless for hours upon end. You will be inconvenienced for an hour or two, but it isn’t the end of the world. There are personal factors like criticality of your job or income on the car that do make being stranded a lot worse.
People look at the future payments rather than the total cost of the situation. Paying $2000 a year in repair bills and a little hassle is still cheaper than getting a five year loan shiny new or used car. A $15,000 loan at 7% interest for 4 years will cost you almost $1000 in interest and $3300 in payments just in the first year.
The last big issue is lack of preparation. If we know our car is nearing the end of it’s life, it is extremely helpful to add a new car item to a monthly budget. If you can afford a $400 a month car payment, start saving that amount and you will be able to buy a $5,000 car for cash in a year.

If you don’t think a $5,000 car will last, think again. My Japanese made Nissan Sentra was 7 years old and had 50,000 miles on it when I bought it for $5,500. 6 years later I am still driving it without ever having faced a major repair.

Sometimes we need to let go of our cars, but often we sacrifice some financial success and prematurely rush into a new car purchase.

» Filed Under Cars, Materialism, Planning

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120th Carnival of Personal Finance :: My Retirement Blog on October 1st, 2007 11:23 am
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FIRE Finance on October 7th, 2007 4:25 pm

Comments

10 Responses to “4 Reasons We Rush Into Replacing Our Cars”

Supercars (2 comments.) on August 25th, 2008 11:40 am

Thanks for your advice about old cars! I have an old chevy that I am going to sell next week. I will follow your advice and see how things go
Mustang (1 comments.) on August 28th, 2008 8:58 am

I do agree with you that people look at the future payments rather than the total cost of the situation! I do that myself before purchasing any car!! Wonderful information.
Todd Beardsley on January 26th, 2009 5:26 pm

Good points. It’s always much more expensive to replace a car than fix a car. Every car will have at least one or two major repair jobs, but this is where most people freak out and want a new one. It’s an expensive mistake to make over and over again.
Silicon Valley (1 comments.) on February 19th, 2009 11:35 am

Absolutely agree. There is no need to ditch cars, especially today when they are designed to last anywhere between 200-300,000 miles usage. Of course this also depends on which models/brands you buy. For example most Toyota/Lexus products will easily go 300,000 miles and beyond as long as you take care of them with scheduled maintenance. When choosing your car model/brand also check out which ones have recieved JD Power awards/rankings for being most reliable and trouble free. In addition a car’s resale value matters. E.g. if you bought a Hyundai, then best use it for its entire life, because it has very poor resale value (more due to branding than any real reason). On the other hand a Toyota/Honda will have fantastic resale value even after 100,000 miles of usage. So might be worthwhile to sell them then a get a new one if you like driving new cars.
Redline Motive (1 comments.) on May 14th, 2009 2:28 am

The tough part about getting rid of old cars is all of the fun you had in them, and all of the memories. Plus, many of today’s cars are big plastic heaps, and do not have as much character as older cars do. I’d say repair the car, keep it running, and eventually get those paint spots fixed

Pass it down to your kids!
Tyres (1 comments.) on May 22nd, 2009 12:00 pm

This post brings back memories of my father who had the same Ford car for 23 years and apart from new tyres, exhausts etc nothing ever went wrong with it.