Around this time every year, auto manufacturers seem to increase the number of advertisements they air in hopes of getting drivers to buy a new car in time to enjoy the beautiful summer weather. According to both history and current trends, this is rarely a good idea, however.
Last year, the price of pre-owned vehicles went up significantly. If this trend holds, you might stand to get much more for your used vehicle down the road. When you take care of your vehicle’s maintenance, you’re not just keeping your family safe and preventing costly breakdowns. You are also paving the way for a better price when you’re ready to sell or trade-in your vehicle in the future as cars in good shape tend to fetch more money for obvious reasons.
But, just as importantly, it means that it’s a seller’s market for pre-owned vehicles right now. While used cars are usually a much better investment than buying new, neither option is wallet-friendly at the moment. The much better financial decision is to keep your current vehicle for longer by keeping up with its preventive maintenance plan.
Here are ten other reasons you should avoid the lure of a new car this spring:
- More car payments – Most car loans are for a term of three to five years. If you keep your car instead of buying a new one, you’re payment free for years 5-10!
- Higher insurance costs – Newer vehicles come with higher premiums for insurance. If your premium is more than 10% of the car’s value, you can drop collision and comprehensive coverage (and pocket that extra cash!)
- Taxes – Sales tax makes up for 13% of the cost of a new vehicle in Ontario – a $15,000 vehicle comes with roughly $1,950 in sales taxes. But you don’t have to spend that extra cash to keep your current car!
- Depreciation – As soon as you drive your brand new car off the lot, it loses value. A vehicle is not an investment. Unlike your house, you can rarely expect to get more out of your vehicle than you put into it. A new car loses 11% of its value the moment it leaves the lot and loses value the fastest during the first five years you own it (15-25% each year). Buying a new vehicle means you’ll be losing money even faster.
- Fees – Registration fees are higher for new cars. License fees, sales tax, ownership tax all factor into your registration fee. Initial payment is often significantly higher than renewing your registration. On top of the dollar value, you’ll have the hassle of waiting in line and gathering all the paperwork – your title, proof of ID, uses vehicle information package, and good old fashioned chequebook.
- Cost of buying a car – Let’s not overlook the obvious. If you’re buying a new vehicle, you’ll need money for the down payment. Instead, you could put that money in a savings account or invest and accrue interest in your pocket instead of the sellers.
- Hidden recalls – Look out for TSBs! A technical service bulletin is like a “secret recall.” The manufacturer knows something is wrong with the vehicle but hasn’t gone so far to recall the component. The bad news is that they don’t share this information publicly unless you know to look for it. If you’re buying a used vehicle (or even a new one), you could end up stuck with a stack of TSBs and hefty repair bills.
- Shopping – You might know exactly the car you want, or you could spend days and weeks researching all the options. From makes and models to paint colour, add-ons, features, warranties, and details – do you have time to research every decision? Besides, no one likes dealing with car salespeople.
- Don’t know how it handles – After years with the same car, you learn how it performs. You know exactly how to accelerate, the noises of the engine, and can pick up on changes and warning signs almost immediately. You know when you need to see your mechanic, so you can catch issues early and keep up with preventative maintenance to avoid damage and big-ticket repairs. If you get a new car, you have to go through the “getting to know you” period again. From wasting gas with “jackrabbit” starts to new noises and smells, you’ll end up spending more money at the pump and the auto shop.
- Maintenance Repairs vs. Monthly Payments – Even with older vehicles and significant repairs, the cost of repairs and maintenance will almost certainly be less than payments on a new vehicle. If you factor in the cost of maintenance you will need to pay for your new vehicle, and the difference is even more remarkable.
When it comes to preventative maintenance for your vehicle, a few hundred bucks each year can mean thousands of dollars in savings. Your owner’s manual is an excellent source of information about your vehicle’s needs, but so is a trusted mechanic. Repair shops with certified technicians, such as Albion Auto., will be able to help you keep your car well-maintained and running until you’re ready to move to a new one.
If you have any questions regarding your vehicle’s health or if you’d like to set up a preventative maintenance schedule, be sure to give us a call at 905-857-8413 or book an appointment online Book-Now