What to consider before replacing a car
A question that car owners will inevitably ask themselves is, “When should I replace my current vehicle?”
For those considering a new (or pre-owned) auto purchase, there are generally four main criteria that will influence that decision: safety, termination of a lease, maintenance/ repair costs and lifestyle change.
Let’s break down each of these criteria. Safety: This has to do with the condition of some older vehicles. There are car owners who don’t maintain their automobiles and, after enough years of neglect, their vehicle suddenly breaks down when a major component fails (engine, transmission, bodywork, etc.).
When a car breaks down, owners are forced to decide (for safety reasons) to either have their vehicle repaired or replaced with a newer model.
Another factor is that older models don’t have as many high-tech safety features as newer models. Forward- collision warning system, side impact airbags, adaptive cruise control and backup cameras are readily available on today’s models, and for that reason alone, car owners may be ready for an upgrade. Termination of a lease: Auto leasing is a popular purchasing option in Canada. When leases expire, many consumers decide that leasing is a sensible option and will opt for a lease on a new vehicle. In these situations, they will replace their current vehicle every three or four years, when their lease agreement expires. Rising repair costs: Although modern vehicles are built well and can operate for hundreds of thousands of kilometres, as vehicles age, major components can fail. When repair costs start to mount as a result of mechanical issues, it’s probably time to conduct a costbenefit analysis on a current vehicle compared to the cost of buying new.
As a rule of thumb, if the repair costs are less than half the present market value of the vehicle, it typically makes sense to have the repairs done. This will provide peace of mind while driving and extend the life of your vehicle. (To check the present market value of a vehicle, visit canadianblackbook.com.)
If estimated repair costs are more than half of the vehicle’s present market value, it could be time to buy a new vehicle. One of the advantages of buying new is that your payments are fixed over a number of years (three, four or longer, usually at very low rates) and the manufacturer’s standard warranty protection usually covers mechanical deficiencies for three years or 60,000 kilometres, whichever comes first.
If you’ve decided to do the repairs, check for open recalls on your vehicle, in which case, the cost of parts and labour are covered by your local new-car dealer. To find out about potential recalls on your make and model, visit Transport Canada’s website at tc.gc.ca and type “motor vehicle safety recalls database” into the search bar. Lifestyle change: Since the average age of vehicles on the road is 11 years, a lot can happen in a person’s life over a decade. In many cases, personal circumstances and work situations often prompt car buyers to replace their current vehicle.
Parents with small children may eventually want to swap a hatchback for a minivan to accommodate kids’ extracurricular activities as their children age. Or, individuals who change jobs and travel longer distances to work may need a more fuel-efficient vehicle to reduce fuel costs.
Buying a vehicle is a big decision, and it’s an important one. If you’ve come to the conclusion that now is the time to trade in your wheels for a newer model, don’t make that decision in haste. This column represents the views and values of the TADA. Write to president@tada.ca or go to tada.ca. Larry Lantz is president of the Trillium Automobile Dealers Association and is a new-car dealer in Hanover, Ont.