Archive for August, 2014

Is trading in your car on your list for 2014? Save yourself some headaches by being prepared and knowing the value of your trade-in. Here are a few tips to help you find the best time to trade in your vehicle.

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There are many ways to run the numbers on your potential trade-in. Some people suggest trading in often, so you can avoid depreciation and maintenance costs, while others recommend driving cars until you simply can’t stand to anymore to get the most value from your purchase. With so many conflicting opinions on when the best time is to trade in your vehicle, how can you find an answer you feel confident in?

So, when is the magic time to trade in? It’s not an easy answer. Generally, a car loses value the fastest in the first three to four years of ownership due to depreciation. After that initial time period, depreciation becomes less and less each month, meaning that by holding on to a car longer, you will “loose out” on less money per month than someone who traded in after just a few years. It’s true you’ll see a smaller trade-in value at the dealership, but the cost effectiveness overall is in your favor.

On the flip side, you don’t want to drive a car that needs costly repairs just to keep going. You’ll need to assess your individual budget and needs to determine exactly what types of repairs are “too much.” As your vehicle ages, it’s wise to begin saving for a new vehicle because you don’t want to be caught off guard when your 20-year-old car suddenly stops being reliable. Take the time to calculate what a reasonable budget for maintenance is for you and know when you’ll need to trade in and cut your losses. Having a target date for buying a new car, such as ten years, helps you plan and budget for your next step.