Why Your Old Clunker May Be Worth Keeping

Many folks are trading in their clunkers and taking on car payments. But what's wrong with keeping the clunkers? They may not get great gas mileage, but hey, they're paid for. And another thing, they won't lose a few thousand bucks by driving them out of the driveway--like that new car loses by driving it off the lot. Keeping the old clunker may make sense for the family budget--even if the clunker is a rust-bucket or gas-guzzling SUV.

If it's not broken, why fix it? That's an adage that works in this case. Why take on more family debt? In these economic times, clearing family debt is sound wisdom. Building up reserve is also sound wisdom. Stretching another year or two out of the old clunker--that too, is likely sound wisdom. Before you trade in your older model vehicle to achieve better gas-mileage with a newer one, you might want to consider some of the not so obvious costs. Here are some things you may not have considered--costs in addition to that new monthly car loan payment.

Increased Cost of Insuring a Newer Vehicle

Newer vehicles usually costs more to insure than older ones. What you'll want to consider is whether that additional cost is going to make the savings in gas worth the trade up. Decide how many miles you put on your older vehicle per month. Then calculate the difference in cost between what you spend currently for fuel and car expenses and what you would spend monthly for the new car loan and expenses--including the additional higher insurance costs. You'll probably discover a huge cost differential. Keeping that old clunker may make a lot more sense when you look at it that way.

Increased Cost of Car-Specific Accessories

Chances are you have a set of studded snow tires for your current vehicle or you have car accessories specific to your current vehicle. Changing vehicles means you're going to be out the expense of acquiring another set of studded tires and other car-specific accessories.

Increased Cost of Warranty Obligations

You're also going to need to meet warranty obligations with car maintenance requirements in order to protect your warranty and investment. All these additional costs add up. Is the extra you pay for gas for that gas-guzzling clunker greater than the additional expense related to the purchase of a new vehicle?

Before you head to the dealership for that shiny new model that gets better gas-mileage than your clunker, you may want to count more than the cost of that new car loan in your monthly budget. In addition, you'll want to count the increased insurance expense, the cost of car-specific accessories and studded tires, and the increased cost associated with meeting car warranty obligations. Maybe your old clunker doesn't look so bad now.