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By: AgFed Credit Union

Welcome to AgFed Credit Union's MoneyDig blog! 

Get confident about your personal finances with a number of articles, tips, advice and more.


When is it Time to Ditch My Old Car?

 Mar 11, 2021
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Buying a car is one of the biggest financial decisions you have to make, and most people do it more often than, say, getting a mortgage. The difficult thing about buying a car is that it seems like everyone you know has different advice.

Some people are used to buying a new car every few years, which does have some advantages in regard to safety, reliability, and modern features. Other people drive the same car until it finally gives its last, and there’s no denying that driving older cars saves you money in monthly payments.

It’s easy for members to find advice on how to buy cars, where to buy cars and even what cars to buy. What doesn’t seem as common is advice on when and why to buy a car, so here are some answers to three common questions about buying a new car.

Should I trade in my old car for a new one?

If your old car is pretty reliable, you might want to think twice before trading it in.

The first thing to do is to take a good, honest look at your current vehicle. How often are you making repairs? How often do you have to take it to the shop? Have you asked a mechanic for their opinion?

Don’t worry about things that aren’t a problem. If there’s nothing currently wrong with your car and you don’t expect to have problems within a month or two, you’re worrying too much. Your car’s job is to reliably get you from place to place, and if it’s doing its job, it’s a good car. Period.

Second, driving a reliable old car is a great financial decision. Every month you use your old car is another month free from car payments, which means you’re saving at least a couple hundred dollars every month! That’s nothing to sneeze at!

Don’t get me wrong, those big repair bills can get expensive really quickly. However, spending a thousand dollars a year on maintenance is a lot cheaper than what you’ll spend buying a new or used car.

If you have an old car that’s in good shape, you should use our Auto Loan calculator to find the monthly payment you can afford. Then, start putting aside that much money each month right now, before you trade in your car. If you keep your car, the money you save will help you with those big repair costs. Or, if you decide to buy a new car, you’ll have a nice down payment. Either way, you’ll be in a much better position to solve your car problem.

Is it worth trading in a car I’ve already paid off?

            If you’re asking yourself this question, it’s probably because you really want something new but you’re having trouble justifying it. Unfortunately, the only person who can really make this choice is you. That said, here are some ideas that should help you feel better about the answer you eventually choose.

First, consider what you want from your car. A lot of people want newer features like a back-up camera and sensors, but what else is on your list that you don’t get right now? If your wish list is getting pretty long, that should help you make up your mind.

Next, you need to compare the value of your old car to a new one. You see, the value of your car is not determined by your trade-in value. Driving your old car saves you a lot of money, because you already own it. On the other hand, the peace of mind you get from a newer car is valuable too.

Make your list and think about the pros and cons of both options. On one hand, your car probably isn’t ancient and hopefully doesn’t need a lot of repairs. That said, if you are worried about safety features, it sounds like it might not be a good fit for you anymore. You don’t have to feel guilty if this decision makes you happier and more safe.

Anything else I should consider before going car shopping?

Once you’ve weighed your options and decided to buy a new car, you still have to go through the actual car-buying process. Maybe you’ve decided your old junker isn’t reliable enough to keep, or you’ve got a life event like having children or sending your kids off to college. Whatever your reason, you’re in for a lot of changes, so let’s try to make this car-buying experience as stress-free as possible.

If you do decide to visit a dealership, do your due diligence. Look for the car you think you want and see what you can afford. Use our Auto Loan calculator to figure out your monthly payment and how long you’d like your loan to be, and factor that into your monthly expenses. If you start putting aside that money right now, you’ll be in that much better shape when it comes time to buy something.

Next, don’t forget to look into financing and pre-qualification, which you can do at your Credit Union! Showing up to a dealership with this information in hand gives you both a second opinion and peace of mind.

Finally, don’t forget that as an AgFed member you can use our car-buying service! They can actually negotiate the price for you, making this process even easier!

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