Trying to cut costs by downgrading your car? We get it, life is expensive and with the increased cost of living, it is becoming more and more difficult to pay all the monthly bills.
When you combine the cost of fuel, monthly car instalments and vehicle insurance, downgrading your large, family wagon for a smaller, more affordable and economical option does seem like an obvious choice to help cut costs. Before you rush to your nearest car dealership to trade in your vehicle, you might want to consider these six factors first:
Safety features: Ensure the smaller car maintains crucial safety elements to protect you and your passengers. Spend some time doing your homework on safety ratings and crash test results to help you find a car that your family will be secure in.
Fuel efficiency: In most cases, petrol is a car’s highest running cost, so fuel efficiency should play a major role in choosing your new car. Furthermore, with the current advances in automotive hybrid and electric technologies, consider downsizing to a PHEV or EV – it may save a lot of money in fuel in the long run.
Maintenance and service plans: The second-biggest cost of ownership is maintenance. Investigate the car manufacturer’s recommendations around maintenance and services. A service plan or maintenance plan offers great value for money with easy monthly payments that allow for better budgeting. Remember that a service plan covers recommended car services by an approved facility for a specific term or kilometres, whichever comes first. A maintenance plan, on the other hand, is a level up from a service plan as it includes wear and tear on items such as shock absorbers, brake pads and wiper blades.
Lifestyle needs: Analyse your lifestyle needs and how they may have evolved since the last time you bought a car. If kids have moved away, do you still need a 3-row SUV? If you are driving in the city 99% of the time, does it make sense to drive an all-wheel drive or 4X4?
New or previously loved car? The used car market can provide the ultimate vehicle to downsize to, featuring all the perks you need and at a great price, compared to a brand-new vehicle from a dealership. Consider parking and manoeuvrability in urban areas, as well as resale value and overall cost when looking at new vs. pre-owned vehicles.
Wait for your break-even point: Be wary of the timing around trading in your financed vehicle. Consider trading your car when the vehicle’s value is either equal to or more than the amount you owe the bank. This is called the break-even point, usually around halfway through a 72-month loan.
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