My car has been paid off for over two years. I am starting to outgrow the once sporty two-door coupe now that I have a couple kids. The paint is fading like the colors of the leaves in late Autumn and it has considerable amounts of rust and small dents that make it look not quite so impressive as it rolls by. It is fourteen years old and while it has always been a pretty reliable vehicle I can tell that it won't be long before it is going to have some serious problems. I have been considering buying a new car and after having some rather bad car buying experiences in the past, I wanted to take a more level-headed approach this time.

The natural first choice for me is to just go trade it in on a newer, sportier, roomier car. In fact, 57% of car buyers trade in their old car to the dealer with no questions asked (Edgerton.) Though this is extremely easy and tempting to me, I have a sneaking suspicion that it may not be the wisest choice. Philip Reed of Edmonds.com says that this is the easiest way to lose money on a car purchase. On a three-year-old midsize sedan, dealers typically pay about $3,500 less for the car than they can sell it for. "Assuming that the dealership actually gave you the trade-in price of your sedan and sold it at market value, it could still make $3,000. And, quite likely, the dealership will sell it even higher than our market value price" (Reed.) By selling my car in a separate transaction, I would probably be able to save $1,000 to $1,500 but is it worth the extra effort?

Another option is to not spend more money on my car than I absolutely have to and save whatever money I can so that when that fateful moment does come, I can just go out and get a new car. More and more people are holding on to their older cars for longer periods of time. "U.S. households spend an average of $653 a year on vehicle maintenance, whether they do it themselves, pay a professional, or a combination of the two. Their spending in the automotive aftermarket has more than doubled, from $88 billion in 1980 to $196 billion in 1996" (Wellner.) Des Toups says that by paying careful attention to important maintenance, one can save a considerable amount to put towards the next car somewhere down the road. He suggests taking the expected new payment amount on a new car and writing a check to yourself each month and putting that money aside. This way, we can find out just how painful that new car payment would be or if we would rather just stick with the old clunker for a little while longer (Toups.)

I have also investigated the costs and benefits of having the car restored to new condition and keeping it for the next few years. In this case, I would be replacing or refinishing most of the parts under the hood. The cost for a new engine, transmission, and their accessories would be about $4,000 to $5,000. I would also want to get the body cleaned up and repainted. That would cost about $3,000 (Wilson.) The benefits of keeping the car and fixing it up is that I would be able to do each project as I had the time and money available and I wouldn't have to get used to something different. I already know what the insurance, registration, and maintenance costs are. The question that arises here is "Am I really that attached to this car? If I am going to put that much into an old car, wouldn't it be easier to just go find something new in better shape?"

One option that I have never really considered until recently is to lease a new car instead of buying one. "The average retail price of a 1997 vehicle was almost $22,000, up 7.3 percent from 1996, according to the National Automobile Dealers Association. In 1992, a new car would have cost closer to $17,000. The attraction for consumers is a new car with lower monthly payments than with purchasing. More than three in ten new vehicles are leased" (Wellner.) As prices for new vehicles rise, leases become more practical to me. The problem that I have always had with leases, is that at the end of the lease you have no car to trade in on a new one or just hold on to for a while. I have really enjoyed not having a car payment for the last two years and I don't know if a lease would be worth the sacrifice of having a monthly payment for the foreseeable future.

I don't know which option I will ultimately choose yet but as I have learned in the past if I don't decide what to do with the old clunker, it will decide for me. And that's probably a lot more expensive than any of these other choices.



Works Cited

Edgerton, Jerry. "Making the Trade." Money. May2000, Vol. 29 Issue 5, p155.

Reed, Philip. "10 STEPS TO BUYING A NEW CAR: What Everyone Should Know." Edmunds.com. April 2, 2002 <http://www.edmunds.com/advice/buying/articles/78386/page006.html>.

Toups, Des. "Keep your Old Clunker or Buy a New one?" Money Central. <http://moneycentral.msn.com/content/Savinganddebt/ Saveonacar/P37270.asp>.

Wellner, Alison Stein. "Keeping old cars on the road." American Demographics. Jul 97, Vol. 19 Issue 7, p53.

Wilson, Lonnie. Personal Interview. Oct 25, 2003