Trying to decide whether to buy a new car or fix up the old one? 

Don't miss out on the Cinderella Era of your car. If you've maintained your vehicle, it can really save $$

We see a new vehicle in a TV commercial, and we must have it. A couple of years later another one debuts and suddenly our old car isn’t good enough. It’s dated, old news; we "need" another new car. Actually we don’t need one, we want one: big difference.  
What we need to do is reconsider the way we look at our cars, trucks and SUVs. Perhaps we should see them as what they are:

As-set ( as-et) n.

a property that has monetary value.

Practically every item of monetary worth, such as your car, is an asset. The new car salesperson may not explain it that way, however. After all, it’s his/her job to make you yearn for a new ride.
The truth is, the car you already own may be one of your most valuable assets.< >HOW CAN YOUR CAR BECOME A MONEY-MAKER?

After you finish paying off the car and own it "free and clear," it converts, in effect, to a money-maker instead of a sponge. Most of the money previously spent on monthly car payments is yours to keep.

THE Cinderella ERA 
Now that your car is out of warranty, your repair bills may go up slightly. However, your car is still in a magical Cinderella Era. This period lasts for several years between the final payment and the day Old Faithful’s repair bills become too weighty. One thing is for certain: if you trade every few years to buy a new car, the Cinderella Era will never be yours to enjoy.

Meet Jay.
Jay owned a very sensible sedan. He paid $20,000 for it, financing it over four years at nine percent. Four years later, when Jay made his last payment, he danced a little dance, sang a little song and promptly went shopping for a new car.
 Jay’s sister, Susan, owned a car identical to Jay’s, which she bought for the same price with the same financing. Amazingly, after four years, the cars even had the identical mileage of 60,000 miles. Unlike Jay, however, on the day Susan made her last payment, she danced a little dance, sang a little song and decided to keep her car for a while. Susan had decided to make the magical Cinderella Era work to her benefit. 
So what’s the moral of this story? First, start thinking about your car as an asset. When it’s free and clear, your car can make money by saving money. Second, get past the idea that you must purchase a new vehicle every time you’ve completed a payment coupon book. And finally, start planning what you’re going to do with all of the money you’ll save by keeping your car through its Cinderella Era.

Instead of having a $380 payment each month, she set aside approximately $100 monthly for repairs and maintenance. Each month, she invested the remaining $200. She blew the balance of $80 on movies and music. Susan did this for approximately four years, at which time she had saved (without scrimping or starving) $9,600 plus interest of more than $420 (at four percent). 
That’s $10, 020!

After four years, Jay had finished paying off yet another car, at which time he did his little song and dance, blissfully unaware that his sister was more than $10,000 richer. Ignoring the Cinderella Era, Jay headed to the car lot to go into debt one more time.

But Wait!

What about Jay’s trade-in? It must be worth much more than Susan’s trade-in.
Shouldn’t that figure into the puzzle? It does. Look at the numbers from Runzheimer International, a management-consulting firm that measures travel and living costs.
(From the Car Care Council)

	OLD CAR	NEW CAR
Mileage at end of four years	120,000	60,000
Total car payments	$0	$18,246
Gas and oil	$3,456	$3,348
License, registration, and taxes	$1,347	$1,882
Insurance	$3,457	$3,946
Repairs, maintenance, tires	$5,022	$2,744
Resale value at end	$451	$7,408
Total expenses	$13,282	$30,166
(minus resale value)	-$451	-$7,408
Total costs	$12,381	$22,758
Difference		$9,927
	Source: Runzheimer International

 

 

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