Purchase a New Car or Keep the Old Clunker?

As humans, we become attached to not only other people, but also things. There is our favorite outfit that fit us perfectly...forty pounds ago. There is our raggedly, old recliner that our cat has been clawing at for years. Also, there is the toothbrush, which, according to the recommendation of some dental association, we should have tossed away half a year ago. We can also become attached to our cars. However, here are some considerations to make about whether or not you need to buy some new wheels:

1. Do a cost analysis. Are you spending more on repairs, than you would for a new car or truck? A new car will cost around $20,000. Surprisingly, even some major repairs (i.e. transmission) can be less pricey than buying a new vehicle. You should save about $50 each month for maintenance and repairs of your current car. Any surplus amount can be saved for your next vehicle.

2. Swap or rent. Due to the factors such as the size of your family, the reliability of your vehicle, or your age, you may feel that your vehicle does not reflect your current lifestyle. You could temporarily swap vehicles with your buddy. Just be certain to return the car clean and full of gas. Another solution is to rent. If you only need a vehicle for infrequent trips, remember that renting is cheaper than making car payments. Furthermore, you can avoid the hassles of license plates, depreciation, insurance, and upkeep.

3. Do repairs exceed the car's value? At a certain point, having major repairs done (i.e. rebuilding an engine) may cost more than actual value of your car. At that borderline juncture, you must determine if investing more in your lemon is worthwhile.

4. Safety first. Older cars tend to have accumulating problems which may or may not be major. If you feel uneasy about your vehicle breaking down, always drive with a mobile phone, and invest in becoming a member of AAA. Also, find an excellent mechanic who can help you with any repairs needed.

5. Is it time to put old faithful to rest? While your car is on its last leg, for three months set aside enough capital for a car payment. Call your bank to learn about their rates for car loans. Also, contact your car insurance company, to learn about the rates for the car you intend to purchase later. Lastly, call your local Department of Motor Vehicles, to learn about the cost of licensing and registration. After three months, ask yourself these questions, to determine if it is time to buy a new car:

a) Should I save for another year and then buy the car in cash?

b) Can I afford licensing fees and insurance?

c) How much would the car cost?

d) Would I rather keep cash saved for the car payments?