Serving Dallas, University Park, and Highland Park, Texas
Have you just been hit with the bad news that your old, reliable car requires a rebuilt transmission or another major repair? If so, you may be thinking, “This old car isn’t worth it. It’s time to buy a new one.”
If you are considering buying a new car rather than fixing your old car, it’s important to take a look at the full cost of that new car before you make your decision.
Sticker Cost: Cash or Financing?
According to the department of energy, the average new car costs $23,186 in 2009, the last year for which data has been published. Add in sales tax and fees, and the cost rises to over $25,000. Even if you happen to have a spare $25,000+ lying around, you’re already looking at several times (maybe even 10 times or more) the current cost of repairing your old car.
Most likely, though, you don’t have that much cash ready to hand, so you’ll likely have to finance the new car, which increases the cost considerably. Financing the car at 6.9% over five years means you’ll have to pay about $500 a month for the car, resulting in a total cost of $29,719. Can’t find an extra $500 a month in your budget?—you can try a 10-year loan. The payments drop to $290, but the total cost goes up to $34,781.
Down Payment, Trade-in, and Depreciation
If you can make a significant down payment and get a good value on your trade, you can cut the cost down. For example, if you can get together $4000 with your down payment, trade in, and rebates, you can cut the total cost to $29,232 for a 10-year loan or $24, 978 for a 5-year loan (if you can make the $416/month payment).
On the other hand, if you buy a new car, it will begin depreciating immediately. An average-priced car is likely to depreciate about $2000 in the first year, and more than $10,000 over the first five years.
Taxes and Insurance
Taxes are an important consideration when looking at the cost of a new car. Your older car may cost you almost nothing in taxes and registration fees. However, your new car is going to cost a lot. For an average-priced car, you may expect to pay over $1,800 in taxes and fees the first year alone.
Insurance is also going to be considerably higher for your new car than your old one. While you may be paying $250 a year in insurance on your old car, you will likely pay $1300 or more on the new car.
Maintenance and Repair
And it isn’t as if the new car isn’t going to cost you anything in maintenance. Much of the routine maintenance for your new car will be about the same as the old car. And there may even be repairs necessary.
Now let’s break it down, using a Ford Fusion SE Sedan (MSRP $22,975) over the first five years using figures from the True Cost to Own calculator:
|New Car||Your Car|
|Remainder of car price||$18,975||$0.00|
|Taxes and Fees||$2662||$100|
|Maintenance & Repairs||$5289||$8289|
In other words, it will likely cost you $36,500 more over the next five years to buy a new car.
Your repair may seem like a lot of money, but when you are comparing to the cost of a new car, the value in repairing your car with an AAMCO rebuilt transmission.
To talk to one of our representatives, please contact AAMCO Transmission and Auto Repair of Dallas today.