4 Signs You Should Buy a New Car

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You've likely heard stories of the ultra rich -- like Warren Buffett -- eking every last mile out of their old cars. Frugal living is a key aspect to building wealth, no matter how much you earn. And car ownership is expensive, so it makes sense to hold on to yours for a good chunk of time.

But nothing lasts forever. Not even your trusted steed that's been with you for more life milestones than your current partner. There comes a point where the extra costs of gas, maintenance, and auto insurance become more than the payments on a new car. Moreover, the vehicle you're driving may no longer be safe.

Here's how to know you should buy another car, whether that's brand new or used.

1. You're guzzling gas

There are always a lot of ifs and buts when it comes to statistics. In the case of cars, a lot depends on what vehicle you drive and how you drive it. Even so, newer cars go farther for every gallon of gas.

Research by the EPA shows that fuel economy reached a record high in 2022. On average, a 2022 vehicle gets almost seven more miles to the gallon than one built in 2004. That's a 35% improvement.

The average American spends over $2,000 on gas a year, according to the Bureau of Labor Statistics. If improved fuel efficiency could lower your gas costs by more than a third, you'd save about $700 a year. Use FuelEconomy.gov to compare the mileage for different cars and get a more accurate figure.

2. Your repair costs are becoming unfeasible

Another big expense of owning an older car is the amount you spend on repairs and maintenance. Money and safety are both big factors here. One study by the AAA found cars that are 10 years old or over are twice as likely to be stranded at the roadside.

In some cases, it can be hard to calculate the cost of repairs. Maybe you're finding it harder and harder to get the car through its emissions test. Or perhaps when you look back you realize you've been at the repair shop three or four times in the past year with increasingly expensive issues. Try to be honest with yourself about how much you're spending and compare that with the payment you'd make on a new vehicle.

In other cases, the math is simpler. For example, if you've been hit with a massive repair bill that will set you back more than the car is worth. Or rust is setting in -- so much so that it could make the car dangerous to drive. Those are both clear signs you need to trade in your beloved old ride and start looking for some new wheels.

3. You want the safety features of a newer model

If you regularly drive passengers, especially your family, safety matters. The average age of vehicles on the road is 12.5 years, per The Zebra. But car safety features have developed in leaps and bounds even in the past decade. Those technologies can save lives and may be a good reason to upgrade your car.

For example, front airbags have been required in cars for over 25 years. But newer models may have side curtain, rear-side, and front-center airbags. These can protect your head and torso in a crash, reducing injuries and fatalities.

Airbags aside, older cars may not have electronic stability control, which lowers the chances of spin-outs. Or back-up cameras that show you the area behind your car when you're reversing. You might be missing out on blind spot warnings to alert you if you're about to unsafely change lanes. That's before we get to some of the automated driving features in modern vehicles.

4. Your insurance costs are spiraling

The cost of car insurance depends on several factors, including your age, driving record, location, and more. If you drive an old car, your premiums may rise if the insurer thinks the car has fewer safety features. If parts are scarce, you may pay higher insurance to cover potentially expensive repairs.

Equally, some old cars cost less to insure because they are worth less and don't have as many costly extra tech features.

Rising insurance costs could be a sign you should buy a new car, but it might also be a sign you need to reevaluate your insurance policy. For example, you might drop comprehensive and collision insurance if the car is no longer worth as much. This may not be an option if you lease or are still paying down your auto loan.

Shop around to find the cheapest car insurance and think about what coverage makes the most sense for you.

When you buy another car, consider a used one

Buying a car is a significant outlay of money and it's understandable to want to put it off for as long as possible. If you're worried about the cost of a new car, look into the used car market instead. Used cars are often more affordable and won't depreciate in value as quickly.

Ultimately, there's a sweet spot between value and compromising on safety or spending a large chunk of your paycheck at the repair shop. If your old car is costing you money and might be putting your safety at risk, it's time to buy a new one.

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