Financial Planning for Generation X & Y Women
 
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Expert Q&A Archive

11/30/2006
When should I think about selling my car?
I have a car that’s three years old. It was a brand new car at the time of purchase, and it’s at 40,000 miles right now. I guess every car depreciates the most in the first three years, and I just wanted to know at what point should one start thinking about selling their car?
Gary Silverman, CFP®:
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Sell your car when it no longer meets your needs or when it costs more to maintain than a new (used) car would cost you. For instance, if you are pregnant with twins, the corvette probably needs to be traded in. On the other hand, most of us want to sell our current car not because it doesn't meet our needs, but rather that it doesn't meet our wants. Almost the day you drive your new car off the lot someone is zooming by you with a neater, cooler, jazzier, shinier, newer car. But do you need that? Doubtful.

So if the car still meets your "needs" what about the cost? Older cars take more maintenance. You'll be surprised just how much maintenance you can absorb, however, rather than absorb a new set of car payments. A new transmission is only a few months' payments. It is amazing just how long you can make a car last. This is where a good mechanic can be your best friend. He/She can tell you if some of the "minor" repairs are leading down a very expensive road or if a major repair is a one-time event.

All that said, I tend to keep my cars until they are 8-10 years old when just about everything begins falling apart. I keep them washed and maintained and park them proudly between the new Volvo's and BMW's in the parking lot. At least mine is paid for.
Suzanne Kincaid:
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This is more of an individual preference. It also depends on the type of vehicle and how well it holds its value. Most vehicles do depreciate the largest amount the first 2 to 3 years. Then it depends a lot on the condition of the vehicle and how well it was maintained. The warranty on a vehicle needs to be considered too. If it has a long warranty--say 100,000 miles or 10 years--you may want to hold on to the vehicle for a longer period.
Alyssa Rakovich:
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Depends on the car and your needs. Look up the blue book value of your car. Do you owe more than it is currently worth? How well do you maintain your car? Is it important to you to have a newer model? Will you feel unsafe when your car reaches a certain mileage point? Everyone sells and buys cars for different reasons.
Jeff Kyle:
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Do yourself a favor. Go to a half price book store, purchase & read “The Millionaire Next Door,” then answer your own question. The book may cost you $7-$8 but will save you thousands, maybe tens of thousands you would waste otherwise on nothingness. Here’s my question for you: “After reading the book, tell me (or better yet, answer yourself) what do the truly wealthy in this country drive? When do [they] trade in their vehicles?”
Anne Delle Donne:
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This will depend on what type of car you wish to drive. If you like to have a new car every 3 years, then you will not want the mileage to increase so much as to bring down the re-sale value of the car. I might suggest looking up the re-sale value of the car on-line via a bluebook for cars to see what different year make/models are selling for and what the mileage is. You do not want the car to have more than 75K in mileage if you want to get a decent value for the car, as many will see this as close to 100K in mileage, and that casts a dark shadow over the re-sale price of the car.