Just last month new car models like the 2019 Mazda CX-3 and 2019 Mitsubishi Outlander PHEV were released in Australia. Before the year ends, the all-new Hyundai IONIQ and Jaguar I-Pace will also hit the local market. With all these new releases, maybe you’re thinking that now is a good time to sell your old vehicle and get your hands on one of these brand new cars. We’re not saying it’s a bad idea, but how do you know if it’s a good idea? Here’s our guideline to determining when to sell, swap or upgrade your vehicle.
Higher repair and maintenance costs
Old cars tend to develop mechanical problems. That’s just normal. But you’ll know that it’s time to let go of your old car if it gives you more problems than not, especially when it’s no longer affordable (or justifiable) to keep forking out for upkeep. When you reach this point, selling or swapping your old car is definitely a good idea.
The car is losing value
Decreasing market value is another indicator that it’s time to sell, swap or upgrade your car. The best way to determine this is by looking at the mileage. New vehicles are serviceable for up to 100,000 kilometres. The closer your car’s mileage reaches this number, the less market value it retains. It’s best not to wait for that to happen because you won’t get much out of your vehicle.
The best time to start thinking about selling or swapping a new car is after reaching 50,000 kilometres. This way, you’ll utilise the car during its best years, but still, have a greater chance to sell it for a good price.
Warranty is expiring
The principle of a car’s warranty period in relation to its marketability works the same way as with market value. Car manufacturers offer 3, 5 or 7 (Kia) years of warranty period. Once the car’s warranty coverage expires, it also loses most of its value to be sold or traded. It’s best to part from your car while there’s still a year or two in its warranty.
Change in lifestyle
A lifestyle change is also a good indicator that it’s time to sell, swap, or upgrade your car. A good example is starting a family, in which case, you might need a larger vehicle with more seats and better safety features.
You may also start new hobbies that require extra power or space! Whether you need room for a surfboard or are wanting to go on off-road adventures, you might need a ute, wagon or a 4WD. Whatever your lifestyle change may be, it can be a catalyst to get a new vehicle.
Your car finance is ending
Most Australians purchase a car through financing. In this scenario, as the end of the loan term approaches, the vehicle is also losing its value. Once the term ends, sometimes the borrower may need to make a residual payment to finally own the vehicle, depending on the finance provider. If you are in this situation as well, then it’s smarter financially to sell or swap the vehicle before the term ends.
There are three key values to make the decision to sell your car a financially sound one: your car’s current market value, the final payout amount, and the down payment amount for your new car. For your vehicle’s market value, you can check out some websites like Redbook and get the price range for the same cars with the same age. You can also take the car to dealerships and get prices for trading it in.
As for the final payout, it includes the remaining unpaid amount on your loan, plus the residual payment. It will also include early termination fee, which most lenders include in the loan contract.
Basically, you’ll sell the car for its current market price. The money you’ll receive is where you will get the final payout amount for the loan. The remaining dollars should be enough to cover the down payment for your new car. If the numbers check out, then it’s time to sell your old car.
Get some professional advice
Deciding when to sell, swap, or upgrade your car can be a bit tricky from a financial standpoint. However, it can also be profitable if done correctly and at the right time. That’s why it’s best to get professional guidance from car finance experts like Aussie Car Loans. Not only will they help you get the most suitable loan product, but they will also give you important advice on what to do with your old car.
Call Aussie Car Loans now to talk with one of our experts on 1300 769 999, and get conditionally approved for your next car.