Knowing when to scrap your car and buy a new one (or used) can be very difficult and can be especially hard if you have just spent money on repair costs.
It can be tempting to adopt the attitude of persevering with a car as you have just spent, for example, £1000 replacing the gearbox, when the car itself may be worth less than that. However this may not be the best course of action and may lead you to spend more in the long term than if you bit the bullet and replaced the vehicle.
The advantages of buying a new or nearly new car are obvious. Assuming you will be replacing your car with a ‘like for like vehicle’, the newer one will almost certainly benefit from lower insurance premiums, better fuel economy, cheaper tax rates and lower maintenance and repair costs. An old car will, however, have the not insignificant benefit of no upfront or ongoing purchase cost. The hard part is determining whether the ongoing repair and maintenance costs will be less or more than the purchase price of a new car taking into account interest and resale value.
Know your history
It is vital to know the service history of the car you own. This can be straightforward if you have been the single owner, or if there have been one or 2 owners, however it can be fiendishly difficult if the car has had multiple owners and there are gaps in the service history. Generally speaking, if a car has been serviced regularly and thoroughly the risk of future problems is low. Check the MOT history of a car here.
Know your brand
It may seem a cliché, but there is definite truth in the belief that certain brands of car last longer. Some brands are more reliable than others and you should research the general reliability and build quality of your specific make and model. Try checking out the Which? guide for a detailed review of some models.
Talk to people
Speak to as many people as you can about your car to find out the most common faults and maintenance issues that you will have to deal with. If you have a regular garage or mechanic they would be the best place to start as they will have previous knowledge of your car. Phone calls to the manufactures main dealer may also help as they will have knowledge of many cars of that make and model. Internet searches should be used with caution as you will be faced with many horror stories of cars that have cost their owners thousands of pounds.
Compare your options
Having been through these steps, you should be in a good position to estimate the ongoing maintenance costs of your vehicle. You can compare this against the upfront purchase cost of a new vehicle, or the monthly cost of a credit or hire purchase agreement.
Remember, even though the numbers may not add up to significant savings either way, can you put a price on the safety and reliability of a newer car? That is perhaps the hardest decision of all.