Christian Living


Buying a New Car vs. Keeping an Old Car

CBN.com Many families buy cars they can’t afford and trade them in long before their usefulness has expired. Most Americans trade cars because they want to rather than need to.

Many people don’t consider that the cost of an auto includes maintenance, payments, repairs, gas, oil, tags, taxes, and insurance – and that  shouldn’t exceed 15 percent of your net spendable income

To buy or not to buy?
In large cities, many can use public transportation. But for today’s average family, owning at least one car is a necessity.

When deciding whether to purchase a new car or keep an older car, consider the costs of each. Luke 14:28 says, “For which one of you, when he wants to build a tower, does not first sit down and calculate the cost to see if he has enough to complete it?” 

  • Monthly repairs for the typical American car on the road (approximately seven years old) run about 5 percent of a family’s budget.
  • A new car takes about 15 percent of the family’s budget. Compare 5 percent per month for maintenance on an older car to about 15 percent to buy a new car – no contest.
  • It’s common to justify a new car because of better gas mileage than an existing car. But some new cars would have to be driven for 20 years or more to reap mileage savings equal to the car’s cost.
  • Unless your car is worn out (200,000 miles or more), it’s often less costly to repair the existing car than to replace it with a newer model.
  • Low-cost financing tempts many to buy a new car. But nothing is free. The dealer may offer a low-interest loan, but the vehicle probably will cost more.

Should a car be financed?
Buying a car by financing has become the norm in today’s society. However, the best way to finance a car is not to finance it at all! 

  • For most people, it’s best to save money and pay cash for a car. Auto financing is poor stewardship, even when below-market factory financing is offered at “too good to be true” rates.
  • If you must finance the purchase of car, there are some basic guidelines that should be followed.
    • If possible, arrange a loan through a bank or other financial institution, because this allows you to negotiate with the dealer on a cash basis.
    • Don’t trade in an old car. Sell it. If a car dealer can sell a trade-in and make a profit, so can you.
    • If your car isn’t paid off, keep it until it is. Otherwise, the current car debt is simply refinanced into the new car loan.
    • If financing is necessary to buy a car, begin immediately to save in order to buy your next car with cash.

During the average family’s lifetime, more money is spent for automobiles than homes. Therefore, when considering the purchase of another car, remember that the least expensive car is usually the car you are currently driving. However, cars do wear out, and if another car is necessary, the best option is to buy a good used car, preferably at a price that can be paid in cash.

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