There’s nothing quite like the feeling of paying off a car and knowing that you no longer have that particular debt hanging over your head. Not only do you own the vehicle free and clear, but now you have extra money every month you can save or spend however you desire!
If you’re like many people, though, it doesn’t take long for the question to arise, “Should I buy a new car or keep the one I have?” This is especially the case when your existing car begins experiencing a few mechanical issues along the way.
Before you dive into this momentous decision, it is good to weigh a few key considerations. Here are a couple questions you’ll want to ask yourself first.
-
How often do you need to make repairs? Used cars will always experience occasional repairs. It’s when you must continuously make repairs that you may become concerned about the reliability of your vehicle. If you’re paying more in repairs than you’re saving from having your car paid off, it may be worthwhile to consider a new car.
-
Is your vehicle still meeting your needs? Older vehicles are typically less economical and will cost you more when filling up at the gas station. If your family has grown or your commuting distance has changed, it may also be time to consider a different style vehicle.
-
How serious are the repairs? Minor repairs and maintenance related issues are something all cars experience. Things like new spark plugs, tires, and occasional belts aren’t a huge deal in the big picture. However, when you face costly repairs, engine wear, or if major systems in your vehicle begin to suffer, it might be time to kick the tires on a newer vehicle.
When It’s Time to Buy a New Car
Once you’ve answered these questions, you may decide that now is the time to buy a new vehicle. Before you do so, you’ll want to take care of a few other essential details first, including to:
-
Identify the value of your current vehicle. It’s easy to figure this out by visiting the Credit Union’s online link to Auto/Truck Values and entering in a few key details about your car. This can help you decide if it is in your best interest to trade your car in on a new vehicle or sell it independently. In some instances, trading your car may not be an option, and you’ll want to know its value before you try to sell it.
-
Scrape together a down payment. Whether you plan to use your current vehicle as a trade-in or not, you may need an additional down payment to qualify for financing for your new car. A good rule of thumb to follow is to try to have 10% of the car’s price to use as a down payment.
-
Get pre-approved for a loan. A pre-approval from the Credit Union gives you the upper hand when buying a new vehicle. First, it allows you to know exactly what you can afford to spend on a new car and helps you stay within your budget. Second, dealerships realize you cannot and will not pay over your pre-approved amount, which helps avoid pricing games and gimmicks by the dealer’s finance office. Members with good credit will be offered an Autodraft, our pre-approved loan draft that may be used to create your vehicle loan right at the dealership.
-
Watch Out For Rebates. In some cases, the dealer will offer a significant rebate if you take the dealer’s auto financing. If the rebate is truly tied to their financing, take the higher rate dealer loan and then refinance with the Credit Union. Dealer vehicle loans don’t have pre-payment penalties, so you can refinance when your vehicle title is received and benefit from the Credit Union’s lower rate financing.
We’re Here to Help!
When deciding if now is the right time to buy a new vehicle, a little help can go a long way. Visit our office, visit lmfcu.org or give us a call at 800-410-0501. Our Loan Specialists will help review your current financial situation and run numbers to help you estimate new payments and your trade-in value before you begin car shopping.