Weighing up what to do with an ageing car
You may have heard it before, or even uttered the words yourself when presented with a quote for repairs by a mechanic, “My car isn’t even worth that much!”
Over time, most cars transform from trusty automobiles into rusty piles of scrap metal. That’s just the nature of things, no matter how well you maintain your car inside and out.
Scheduled servicing is a way of ensuring that as consumable parts of your car wear out, they are renewed and replaced to ensure safety, reliability and extended life on a vehicle.
In this world of 'trade it in or throw it away' it seems logical to compare the market value of the car to the repairs cost presented. What may come as a surprise is that over the life of a car, normal ongoing maintenance will naturally add up to more than the purchase or value price.
If your odometer is well into six figures, you may think it’s high time for a new car, but with new cars come new costs. New cars attract finance repayments; higher insurance premiums; more expensive logbook servicing…the list goes on. So should you run your existing model “into the ground,” or trade-up for something better?
What’s your car worth?
The first step in deciding what to do with your car is figuring out its value. If you sold your car on the open market, how much would you get for it?
You can figure this out using a variety of sources. One good avenue is looking it up on www.redbook.com.au , which is one of Australia’s most trusted guides to valuing cars.
You can also look at online car classifieds and dealer websites to see how much your model is selling for. Another tip is asking your insurer what they consider a fair market value.
If it’s not worth much, how much do you have to spend?
You might think that your car is far below the market value due to a few dents, shot electrics and ageing components.
So how much would you have to spend to make it sellable? If you have to spend thousands just to get it into acceptable condition (with roadworthy being the absolute bare minimum), it’s probably best to leave it as is and continue routine maintenance.
It’s inexpensive to keep it running
It won’t cost you anything to leave your older car running until it wears out, especially if you own it outright.
You can leave cosmetic damage alone (if you don’t mind it) and if your radio isn’t working, but you don’t miss it, then you don’t have to worry about it. Insurance premiums will cost you less, and servicing might involve simple tasks that you could even do yourself.
However, if parts need replacement and costs exceed the car’s value; the decision to upgrade is made for you.
But trading it in carries its benefits
Trading a car in has its advantages, even though it may not attract a market-topping price.
Dealers won’t give you full value for it, but a trade in will shave a bit off the purchase price of a new car.
New cars are more expensive to buy and insure, but they can save you in other areas.
Improved fuel economy and fewer ongoing repairs are a couple of saving benefits, and higher safety ratings may “save” you in an accident. Even so, you should do your homework before you trade-in.
If you’ve read this far, you obviously care about your car and your decision to keep it or trade it up. AutoGuru.com.au lets you search, compare and book from over 1600 qualified mechanics across Australia who carry out inspections and repairs on the daily. Boom!
Bill Tsouvalas is the founder and managing director at Savvy finance. He has been working in the vehicle and asset finance business for over 8 years.
Bill also writes articles on car finance, chattel mortgage, insurance, consumer protection and insurance related topics.