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Traiding the car in...

American Government Special Collections Reference Desk

Traiding the car in...

Naum Levinson
January 18, 2006

Trading the car in:what makes a financial sense? A lot of people are trading their cars in every 4-5 years. A car payment, stretched over 5-7 years, is not uncommon.

Unfortunately, the situation, known to dealers, as "upside down" is not uncommon either. It means, that the person owes for his/ her car more, than the car worth.

If the person keeps trading cars every 4-5 years, there still 2-3 years of payments left, and the financial situation is just getting worth...

How to avoid the situation like that?

A lot of financial experts agree that maintaining your present vehicle makes much more financial sense. Contemporary vehicles are more reliable and, with proper maintenance, can serve reliably`for 8 years or longer. After the car is paid off, you can save about $2500 per year, including repairs, maintenance, license, registration, taxes and insurance.

That's what we call "Return on Investment"....

If proper maintenance was done over the years, a repair bill from time to time is a "drop in the bucket," compare to the regular monthly payments for the car. If a car was paid off during the period of 5 years and has survived another 4 years, it's the savings of $10,000,

Nice downpayment for the new vehicle, right?

Let me give you an example. When I've purchased my 1994 Toyota Camry, the car was two years old and had 27,000 miles. Five years later, it was paid off. For four years I am enjoying not having payments on my car. Except for the regular maintenance, I didn't have any unexpected breakdowns and car is still very reliable, taking me and my family where we want to go.

As you can see, I am preaching from my own experience. It's not difficult and it can be done!

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