Time for a New Vehicle?
Evaluating whether to keep your old vehicle or look for a replacement means weighing costs while considering your needs and wants.
By Will Scott | Illustration by Jeannie Phan
DETERMINING WHEN IT’S TIME for some new wheels can be challenging. So, we asked Ryan Peterson, CAA’s manager of automotive services, for help. “I get this question all the time,” he says. “And it’s complicated.” Read on for his tips to help make the best decision.
Personal finances: the core question
Compare the costs of keeping your vehicle against the costs of buying a replacement, new or used. If your budget is small (e.g., $5,000), you might find that any car you can afford won’t be significantly better than what you already own. So, it might make more financial sense to invest in fixing your current car, as you know its history and potential issues. However, continuously pouring money into repairs can quickly deplete your savings, so it’s essential to continually reassess your budget. If major repairs become too costly (e.g., transmission or engine failure) and you decide it’s time to buy, exploring financing options might be necessary.
“Compare the costs of keeping your vehicle against the costs of buying a replacement, new or used.”
Essential factors to consider
- Annual repair costs vs. vehicle value: A common rule of thumb is to consider replacing your car when annual repairs meet or exceed its value. While there is some logic to this, it’s not the sole determinant. Read on for more criteria to help you evaluate your choices.
- Known history vs. unknowns: Keeping a vehicle you’ve owned for a long time means you know its complete history, reducing the risk of hidden problems. If your vehicle has been generally reliable, you might get a few more good years out of it.
- Engine longevity: Certain car manufacturers are known for engines that last hundreds of thousands of kilometres. This can be a significant factor in deciding to invest in repairs. A simple Google search can help, or ask CAA’s automotive experts.
- Structural integrity: Rust and corrosion can render a car unsafe and too costly to repair. A significantly rotted frame and body are usually beyond saving.
- Comprehensive inspection: Have a trusted mechanic perform a thorough inspection and flag any issues. This will be a great help in evaluating your looming costs. CAA Members get exclusive savings and perks at participating Approved Auto Repair Services (AARS™) facilities.
Other considerations
- Changing needs: Has your lifestyle changed? Are you expecting children and now need a larger vehicle, such as a minivan instead of a two-door coupe?
- Total cost of ownership (TCO): For new car purchases, consider the lifetime costs, including insurance, fuel/charging, payments and general maintenance. CAA’s Driving Costs Calculator (see below) can help.
- Additional costs of buying new/used: Watch for hidden costs when purchasing a new or used car, such as sales tax (even on used vehicles), licensing, delivery and certification, as well as dealer fees such as documentation or prep fees. Insurance rates for newer cars are usually higher, too.
Ultimately, this decision is highly personal and circumstantial. “You will need to continually evaluate your budget and other criteria,” says Peterson. Take your time, do your homework, and you should come to a solid conclusion that works for you. CAA
CAA can help. Ask any questions you have about vehicles. Call 1-866-464-6448 or email autoadvice@caasco.ca.