If you’ve been driving the same vehicle for many years, maybe even since you started driving, you’ve probably felt that longing for a sleek new car at least once. With so many new features being released with cars every year, it’s hard to not feel a bit of envy when you pass one with your older model. For some car owners, trading in their vehicle for a newer model is about reducing emissions, using cleaner fuel, or simply getting a more reliable vehicle. But there are many reasons why keeping your old car is often the best financial decision you can make.
One reason that keeping the vehicle you own is a good idea is that it can be put to work for you if your budget ever suffers a financial crisis. Car title loans depend on having a car title, which you won’t have if you have traded in your vehicle to lease a new one. Here are a few other reasons that you should consider keeping your old vehicle in many, if not most, cases:
The moment you buy a new car and drive it off the lot, it starts losing value. Even if you were to sell a new car a few days after you bought it, it would be worth less than it was when it rolled on to the lot. And in fact, new cars depreciate at a much faster rate than older cars. New cars depreciate simply because they are owned, and are being driven. The difference between 1,000 miles and 10,000 miles on a car seems greater to potential second owners. Every little flaw, from a slight stain on the carpeting, to a minor scuff on the handle, is inspected closely.
However, older cars depreciate a slower rate. Those little dings or stains in the interior are written off more quickly by potential buyers. They expect older model cars to have a few imperfections. Additionally, while the difference in mileage is the same as our example above, the difference in a buyer’s mind between 100,000 miles and 109,000 miles is negligible.
If you are able to quickly pay off a new vehicle, you may argue that having a newer model could actually help you get an auto title loan in the future. After all, many title loans are based on the car’s value, and the newer the car, the less it will have depreciated. This is true on one level, but the fact is that the car’s value is more likely to be determined by the shape its in, rather than the year. If your older model vehicle is in great shape, thanks to your careful driving and regular maintenance, you’ll be able to get a good car title loan regardless of its age.
You’ll save on insurance.
Newer vehicles carry higher insurance costs, simply because fixing or replacing a heavily damaged new vehicle will be much more expensive than fixing or replacing an older vehicle. Many insurance companies also offer discounts for older vehicles, which can help cut down on the costs of insurance.
This is best shown in the example of gap insurance, which is an auto insurance that is sometimes required of owners when they are taking out an auto title loan. If you are involved in an accident with a brand new vehicle, you may still owe quite a lot of money on the vehicle; however, due to depreciation, the vehicle isn’t actually worth what you owe according to the insurance company. While most consumers would receive only what the car is worth, leaving them to cover the rest of the lease amount, gap insurance pays the difference so that you can get out of the lease of a vehicle that was totaled.
For those who already own their cars, gap insurance can be used to cover the cost of a car title loan in the event that your vehicle is totaled, and you owe more than the insurance company considers the older car to be worth. Because you won’t have borrowed as much as the lease on a new car would have been from the auto title lender, your gap insurance coverage will cost much less.
Car payments can be crippling.
Next to mortgage payments and health care payments, car payments can be one of the largest chunks of money regularly coming out of your income. A payment for a new car can range anywhere from a few hundred dollars to possibly over a thousand dollars per month, and some leases even require twice monthly payments. Not only can this restrict your budget, it also makes it hard to save for the future.
If you’ve already paid off your car, you may not remember how hard it was to deal with a large payment every month. Maybe you are looking at your much freer budget and thinking how easy it would be to afford a new car payment. But consider the fact that once you’ve committed that money – for the next several years – you won’t be able to enjoy the financial freedom that you have now.
Without a new car payment, it’s far easier to add to a savings account that can help cover the types of financial emergencies that you may need to use an auto title loan for in the future. If you have savings in place to draw from, then you’ll only need to borrow a smaller amount, which means it will be easier and faster to pay off your loan. This kind of financial security is priceless.
Help the environment.
One of the biggest arguments for buying a new car is to help the environment. New models are designed to produce lower emissions, and to use cleaner fuels. However, have you considered the enormous effect that manufacturing a new car has on the environment? Just because new cars may rely on electricity rather than gasoline, the environmental cost of production may be extreme.
After doing the calculations, many experts have found that the environmental cost of using gasoline and relying on your old vehicle could be about the same as buying a newer, “clean” vehicle. This means that if you continue to use your older vehicle, and even fix it up a bit so that it will last longer, you could help save the environment the cost of producing a new car for many more years. By the time you have to buy a new car, and choose your first “clean” vehicle, you can rest easier knowing that the environmental cost of creating your original car wasn’t in vain, because you used it until it couldn’t be used any longer.
Qualify for Car Title Loans.
Once again, it’s important to remember that Car Title Loans can only be used by car owners. You must have the title free and clear of all other leases and liens before you can get a title loan. This isn’t something that many car buyers consider; after all, who really wants to plan on having to take out an emergency loan someday?
But it’s smart to keep as many routes to fast cash open as possible. Financial emergencies can pop up at any moment, and if you are like the majority of Americans, you probably won’t have the savings necessary to cover the entire amount. A medical bill, storm damage to your home, a persistent bill collector, or a problem with your taxes could all make your stable financial situation take a turn for the disastrous very quickly.
By keeping the asset of an owned vehicle around, you ensure that, should you ever be in dire need, you can turn to an auto title lender to help you out of a problematic jam. Your car can work for you, keeping your family healthy and safe, so long as you own it.
For these five reasons, it’s a great idea to consider keeping your older vehicle as long as you can. The costs of repairing an older vehicle are often cited as a reason for getting a new car, but even if you are looking at considerable costs to fix up and maintain your older model vehicle, the benefits of owning your car are still valid. Your older car will still depreciate at a slower rate; you will still save on insurance, and avoid long-term car payments; you are still doing your part to make the environmental cost of manufacturing your car worthwhile; and you can still qualify for an auto title loan, thanks to the fact that you have the car’s title.
Next time you drive by the car lot and see the shiny new models lined up outside, or you see your neighbors and friends driving the best new vehicles with the latest features, remember that you likely have a much more stable financial situation, and that your old car offers you a ton of great benefits simply because it belongs to you.