When to Sell or Trade Your Car

There comes a time for every car owner when you must decide if it is time to sell or trade your car. But when is the right time? Ask yourself these 4 questions and the answer may become clearer!

Does My Car Fit My Life?

When you bought that Hummer 5 years ago you were working 5 miles from your house. Now your new job has you commuting an hour both ways-and filling up 3 times a week. Or maybe you love your 2-seater sports car, but now with a child in a car seat, being able to get the entire family in one car would be a real bonus.

Your family expands and shrinks and driving habits change. If you want to get really analytical, spend a week recording how much driving you do, where you do it (highway or around town), and how much room for people and cargo you need. The data may surprise you.

What Can I Afford Every Month?

You need to be able to afford the car you own, and I am not just talking about the payment to the bank. Factor in every expense, including the price of insurance, gas (regular or premium), regular maintenance, and bigger repairs too.

Experts advise that your monthly car expense should not exceed more than 8% of your gross monthly income. So if you can afford that new 911, have at it, but make sure you can cover all your expenses.

What is My Tolerance for Repairs?

Mechanics claim that if your car has been to the shop three times over the past year for repairs it's not a normal, healthy vehicle. Due to amazing advances in the auto industry, most vehicles really are reliable, but only to a point.

You need to decide quickly if your car has just outlived its reliability (as in 150,000 miles), or was not built to last on the onset (maybe a lemon built early in production).

Then again, you may love that vintage Jaguar and spending time at your favorite mechanic's shop is a trade-off you are willing to accept. Either way, be realistic about your tolerance for time in the shop.

Are There Big Expenses Coming Up?

This is the really big question. For most of us, when to sell or trade is like an economic game of chicken-waiting until just before that budget-busting breakdown. What to watch for?

• Dark smoke. Heavy or blue smoke out the tailpipe (in warm or cold weather) likely means you're burning oil. This is a huge indicator of trouble such as valve or engine issues. Check your oil level and if you are burning oil, start thinking about options now.
• Gear slippage. If your gears slip on your transmission, making your engine sound like its revving for no reason, you have a major expense coming up.
• The perfect storm. It may not be a major expense, but you can sense when there are big ones coming up. For example, if you need new tires, brakes and the suspension seems to be going, it's time to get out.

The decision to sell or trade your vehicle in for a new one may seem daunting, but by carefully analyzing your own situation, you can make a decision you can live with for a long time.