When to trade in your old car for a new one

By Harper Banks

You may have noticed that your car isn’t running as smoothly as it used to. This is particularly concerning if you’re hoping to sell it at a reasonable price, and buy yourself a modern alternative.

We have a look at the process of trading in your car, and we find out how to time this in order to avoid a loss.

Tip: A personal loan can help you cover the cost of car repairs. Find out if you qualify.

Time the trade-in well

According to Nunben Dixon, head of automotive at Gumtree, trading in or selling your car can be overwhelming, especially if you aren’t sure of the right time to do it. He notes some important aspects to consider. 

“It’s a good idea to sell your car when it reaches the 75,000 to 100,000-kilometre mark, as this is when it’s more likely to need regular repairs and maintenance, which can end up costing you an arm and a leg.  

“You’ll also want to avoid selling your car before the settlement and trade values are equal. This is called the ‘breakeven point’, and trading in a vehicle before this often results in having to buy yourself out of the finance contract you originally agreed to,” he explains.

READ MORE: Calculate your vehicle finance instalments

Dixon points out additional factors you should keep in mind when you’re planning to sell:

  • The high costs of fuel and insurance premiums can be crippling. Consider trading a gas guzzler for a smaller, more economical vehicle to give yourself the room to breathe and rebuild your finances.
  • High-end or luxury cars incur huge maintenance costs. More importantly, their trade value drops significantly as they get older. In this case, it’s especially important to sell when the car’s value is still significant and attractive to dealerships or other independent buyers.
  • If you are at the end of your warranty or motor plan, consider selling the car before its trade-in value depreciates significantly. The warranty protects the owner of the vehicle and if not in place, repairs and maintenance costs can be prohibitive.
  • Sell your car if the specific make and model have been discontinued, as finding parts later will be a nightmare.

If you’re confident that it’s the right time to sell or trade in your vehicle, you can either approach a dealership or advertise. Various online platforms, such as Gumtree and WeBuyCars, make the advertising process easier.

If covering a trade-in shortfall, make sure that you take out vehicle finance for your new car, rather than a personal loan. The former will have lower interest rates because it’s directly tied to an asset.

Make sure you also have car insurance in place for your new vehicle.

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