Times have changed …… things which were okay last year are bad today and things which were bad yesterday are great today.

The car you wanted to sell yesterday looks very good today.. why? Because now changing the car is your last priority, second priority to paying mortgage, paying for the gas, paying for your kids education, paying for your insurance, paying for your health insurance and even paying for your groceries!

Let us see if this is really true or  does it make sense to bite the bullet and change the car? Buy the new shining car and dispose of your always-requiring-repair car now?

Let us take an average price of a new car as $25,000 and with all taxes, license fee and other expenses the total cost of $27,500.

If you are lucky and have a good credit, then you may get an exciting interest rate of 2.9% for 5 years. Your monthly payment at this interest rate will be $493/month!!

On an average the cost of maintenance is approx $700/year. This includes all minor repairs such as oil change, brake replacement, tire rotation etc and major repairs such as serpentine belt changes, schedule maintenance services etc.

Now let us calculate the savings of keeping your existing car for another 3-5 years

New car spending for next 3 years = $493 x 12 months x 3 years= $17,748
If you keep your old car, your cost of repairs will be = $700 x 3 years = $2,100

Saving in only three years:

A saving of over $15,000!! (with 2.9% APR)
A saving of over $16,500 (with 5% APR)
A saving of over $20,000 (with  $35,000 car and 2.9% APR)

Few things to consider, this calculation assumes that you are keeping your old car in good condition by following good practices:

1.    Keeping you tire pressure as per the manufacturer recommendations
2.    Getting oil changes every 3-5,000 miles
3.    Rotating your tire every 5,000 miles
4.    Getting scheduled maintenance at 30,000: 60,000; 90,000 miles etc
5.    Changing air filter every 3-5,000 miles

As you can see, that in current economy it absolutely makes sense to keep your old car (Sorry GM and Ford) for another 2-3 years and save between $15,000 – $20,000. You can certainly spend some money on making your car look great by getting it detailed every 6 months, getting it waxed etc every year and keeping it clean inside and outside so that you feel great while driving it!

Now is the time to make a wise decision and start saving instead of spending. Try  to always have at least 6 months of your monthly expense in your bank as a buffer for any unforeseen situations.

Oil change ; $ 25
Car wash: $10
Tire rotation: $10
Loving your old car: Priceless