When to trade in my car for a new one?
January 30, 2012 10:32 AM Subscribe
Help me determine the optimal time to trade in my car for a new one.
posted by jalexc to travel & transportation (7 answers total) 2 users marked this as a favorite
I'm thinking about buying a new/used car. If I did, I'd trade in my current car. I'm trying to figure out the most cost-effective time to trade the car in. In doing so, I've come up with the questions below. I'd appreciate answers to the questions, as well as reasons why this thinking is wrong (like costs or benefits I'm failing to consider).
1. Assume I have sufficient cash on hand to buy whatever car I want outright. Assume my current car has a trade-in value of $10,000 (disregarding whatever games that would be played by the dealer; just assume that if I bought a $20,000 car and traded in my current car, I would have to pay $10,000 in cash to drive the car off the lot).
2. Assume that I don't trade in my car now, and tomorrow, my car suffers some problem that would cost $1,000 repair.
2a. Assume I don't repair the car. Is its trade-in value $9,000, or less? Or more?
2b. Assume I do repair the car. Is its trade-in value back to $10,000, or is it less? Or more?
Basically, I'm trying to determine what reasons there are for not trading in a car now, when its trade-in value is highest. I know there's a big outlay of cash to get a new car, but is this offset by not having to pay for repairs on the old car and having more trade-in value/MPG efficiency/whatever on the new car? In case it's helpful to get out of the theoretical, my current car is a 2005 Jetta with approximately 75,000 miles.