How to Recognise When It's the Best Time to Upgrade Your Car

time to upgrade your car

When you have your vehicle for a while now, you might be keen to know when it’s the best time to trade it in for another vehicle. This is definitely a point worth considering before you commit to look for a new vehicle. You will have to see whether your existing vehicle still fulfills the needs of your current lifestyle and whether it is still running safe or not.

Additionally, people also need to change their vehicles because of expansion in the family or a new job. For example, when you get married or have kids, they are probably not going to like your classic sports vehicle, no matter how exciting or comfortable it is to drive. Also, if your warranty coverage is over and your vehicle requires costly maintenance every now and then, it’s best to get rid of your problematic automobile. In Australia, many people prefer to upgrade their vehicles after every three years. Most of them are simply attracted by that new car smell and there is of course nothing wrong in that.

However, whether you want to buy a more spacious, comfortable or elegant new or a second hand car which smells same as new. You should definitely assess the upsides and downsides of keeping your current vehicle, whether you own completely own it or using it as part of a lease arrangement.

Outright ownership

If you have ownership of a car from 3 years, then there is no doubt that most of its value might have depreciated. The average rate of depreciation means that your automobile’s resale value is generally less than or half of the actual price. At that point, the buyer of your automobile will be the main beneficiary. A very smart and financially pragmatic decision is to use your existing vehicle for as long as possible.

However, it is very difficult to resist the temptation of buying a newer automobile. Beside this you would be preventing yourself from using an automobile of latest technology in terms of connectivity, safety and fuel-efficient engines.

Even if you own a vehicle that is highly depreciated in terms of its value, you can sell it for a fair money and use the proceeds for buying a newer automobile. However, remember that you will get less money for it, if you choose to trade it in at a dealership. If you have adequate savings or buying a reasonable second hand vehicle, you will also need to consider your financial options. It will help you to cover the difference between the cost of a new vehicle and selling your existing one. However, used car buyers could be your best option to get the quickest way to get cash for your car.

You should also choose an appropriate time to sell your car. In order to get the best deals on the purchase of a new automobile, make sure to shop in the months of May or June and November or December. This is because at that time dealers usually focus on getting cleared as many cars as possible to reach the sales targets.

Car Leasing  

When you buy a car on lease, it is important to return it before the expiration of the lease period or else you would have to pay extra fees. This is regardless of whether you are using a vehicle through a novated and salary-packaged lease, business-based finance lease or manufacturer’s Guaranteed Future Value (GFV) scheme. In order to avoid this situation, you can choose a lease period that ties you in agreement that you will return the automobile when you would prefer the next change of automobile. Usually, leases are provided between 1-5 years. However, manufacturer’s GFV schemes are provided for a period of 3 to 4 years.

But you will need to limit using your automobile, if you are near to crossing the agreed mileage limit for the lease period. Otherwise, you will have to incur the financial penalties associated with it. If you want to keep the vehicle for another period of time, you also have the option of refinancing the lease.

Remember, your vehicle is worth trading in, if you have maintained the car properly and used it within the restricted mileage. Also, if the agreed residual value of the automobile happens to exceed its market price, then you get to pocket the difference tax-free.

You can simply return the automobile in the manufacturer GFV schemes, provided you have agreed to the terms. This is because you have necessarily been renting it from the automaker and then choosing to buy a next vehicle. You can also consider to retaining the automobile by paying out the entire GFV amount or trade it in by using any credit difference between the GFV and the market price and use the money towards the purchase of newer automobile. Ultimately, it depends on your requirements and lifestyle circumstances, whether you want to upgrade your vehicle or not. 

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