should i trade in newer car

How Trading In a Car Every Two Years Makes Good Financial Sense

Should I Trade In a Newer Car (After 2 Years)?

Do you have a newer car that you don’t want any more?

You don’t need an excuse to trade in a newer car after 2 years.

Maybe you want to buy newer model, or perhaps you want to save money and downsize to a more affordable model.

Don’t let anyone tell you that you shouldn’t do it. Learn how to trade in a newer car the right way.

should i trade in newer car

Matt Trades In His Car Every 2 Years


I took our 10 year old Honda in for maintenance and was relaxing in the waiting room, minding my own business. Before I knew it, I was chatting with Matt, one of the auto shop workers. I mentioned that I read an article about how 200,000 miles was the new 100,000 mileage for a car.

I expected a car shop worker to agree with that comment and back up my enthusiasm for maintaining and keeping a high mileage car.

After all, if everyone kept older cars, the repair shops would prosper with hoards of customers repairing their old cars. And this would further secure Matt’s job.

Matt’s response completely floored me.

The worker at the auto shop mentioned that it didn’t really matter to him whether people kept their cars for a long time or not, and he traded in his newer car in every 2 years. Matt continued by disclosing that he likes to drive new cars.

Matt’s reason for trading in a car after two years is that he likes to drive a newer car.

Next, I made a mistake!

I began lecturing Matt about how he could save more money if he kept his car longer.

Why Matt’s Decision to Trade In His Car Every 2 Years Is the Right Choice

He had the perfect response to my comment, “I like driving a new car. I don’t go on vacations, buy expensive electronics, or live extravagantly. As a matter of fact, my condo is totally paid off.”

That retort shut me up.

Matt made a conscious choice to spend money on what mattered to him and he had his financial life in order. He made a well thought out choice and he could afford to trade in his car after two years.

He wasn’t trading in his car every 2 years because he was financially ignorant, but because it was important to him to drive a new car and he was willing to spend less in other areas of his life to drive a new car!

Who am I to argue with that? Stay with me here.

What if your finances aren’t in the greatest shape and you still want to trade in your 2 year old car?

Trading in your new car may be a good decision for you.

If you need some financial hand holding, learn How to Get Rich by making smart money decisions in my vital money book. You don’t need to be a money genius or give up nice cars to build wealth.

How to Decide Whether to Trade in Your 2 Year Old Car?

Consider why you want to trade in your newer car? Are you looking to “save money” and buy an older model?

Even if you just want a newer car, it may not be a terrible financial decision to trade in your car after two years.

Let What Is Important To You Influence Your Spending Decisions

If it’s important to you to drive a newer car. Make it happen for yourself.

How to Trade in A 2 Year Old Car; The Right Way

Prioritize how you want to spend your money and allocate a portion for your car expenses.

Step 1: Sell your car yourself.

Kelly Blue Book, the car valuation site, back ups the fact that if you detail your car and list it on Craigslist and other online sites, you’ll likely receive more for your car than if you trade it in to a dealer. It usually takes a bit more time and effort, but you’ll walk away with more money.

The only time this strategy won’t work is if your car is worth less than the car loan. In that case you either pony up some extra cash to pay off the loan or trade it in at a dealer.

Note: If you expect to trade in a newer car, buy one that holds it’s value well. This will make selling the 2 year old car more profitable.

Step 2: Line up financing first.

Shop around to get the best car financing deal with the lowest interest rate possible. This way you can separate the financing decision from the purchasing choice.

Step 3: Take the emotion out of the equation.

Determine the type of car you want and be prepared to negotiate. Find the Best Car has some great tips for savvy car buying.

Step 4: Separate the financing from the purchasing decision and negotiate on line for the lowest price.

You’re better off having several models in mind, so that you can purchase the model with the best price.

Step 5: Compare the cost of leasing with buying.

You might save money leasing a car every few years.

The Dollars and Cents of Trading In a New Car Every 2 Years

Keep in mind that the specifications, condition, and your geographic area influence the analysis.

According to Kelly Blue book, you can sell a 2012 2 door Honda Coupe EX-L to a private party for $20,588 in the bay area of California.

Assume you buy the same car in the 2014 model, the list price is $28,270. Consider the possibility of negotiating to knock down the price a bit.

Simply, you’re paying three to four thousand per year to drive a new car {($28,270 – $20,588 = $7,682)/ 2 years)]. For many individuals, that cost is worth the money for the enjoyment of driving a newer car.

Look at your own personal situation, and factor in the cost of trading in a car every two years. If you don’t have money to buy  everything you want, then ask yourself, “In what areas are you willing to cut back in order to drive a newer model?”

The annual cost of a driving a newer car may not cost more than a  yearly luxury vacation with the family. It’s also not much more than annual football tickets or regular dining out at nice restaurants. Bring your lunch to work every day and you have the extra money for a newer car.

It’s your money, and if you like driving a new car every two years and it won’t sink your financial boat, why not?

Financial experts sometimes suggest there is one right way to spend your money. And that is not true. The right way to spend your money is to make a conscious decision and think about your financial choices.

How often do you get a new vehicle? How do you make the choice when to buy a new vehicle?


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