When does it make sense to buy a car?

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Susan Meyer

Senior Editorial Manager

  • Licensed Insurance Agent — Property and Casualty

Susan is a licensed insurance agent and has worked as a writer and editor for over 10 years across a number of industries. She has worked at The Zebr…

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Ross Martin

Insurance Writer

  • 4+ years in the Insurance Industry

Ross joined The Zebra as a writer and researcher in 2019. He specializes in writing insurance content to help shoppers make informed decisions.

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The best time to buy a car

Finding the best time to buy a new car can feel like a gamble. If you wait too long, your old car may start having issues. If you buy too soon, you could miss out on plenty of life that’s left in your vehicle. 

To make the decision process easier, think about the specifics of your current car situation, including things like its value and repair costs, plus what you’re looking for in a future car. Here are five factors to consider as you decide the best timeline for replacing your car.

Is your auto loan less than the car’s value?

Your auto loan (if you have one) plays a huge role in whether or not it makes financial sense to buy a new car. If you originally purchased a new vehicle, you’re likely to experience a more dramatic percentage of depreciation[1]. The first year causes a 20% drop in value; after that, the annual depreciation rate averages 15%.

Depending on the size of your down payment and how long you’ve had your car, you may be underwater on the loan — meaning you owe more than your car is worth. Not only will you need to pay for a new vehicle, you’ll also have to pay off the existing auto loan, either after selling it or trading it in for a loss. In this situation, you may be better off keeping the car until the loan is repaid and you can save enough for a down payment on another vehicle. 

Has the cost of auto repairs jumped up?

Look at how much your car repairs are starting to cost you. If you feel like you’re constantly in the auto repair shop, it may be time to begin the hunt for a new vehicle. Or if you realize you have one major repair, you may be better off putting the money towards a down payment on a new vehicle instead.

Use both statistics and your car’s own history to gauge future repairs. According to Consumer Reports,[2] a 5-year old car averages $205 per year in repairs, while a 10-year old car averages $430. Look at the specific scale of repairs you expect in the coming year and decide if they’re worth it — or if you want to sell or trade in your older car before it needs more work.

How will buying a new car impact your auto insurance premium?

There are a couple of ways your car’s age can impact your insurance premium, driving up the total cost of ownership. The vehicle’s age itself reduces your premium over time. According to The Zebra’s State of Auto Insurance 2021,[3] the biggest drop happens when a car turns eight years old. The average premium goes down by 7.74%, resulting in an annual savings of $112. 

Older cars with more mileage have just a slight impact on your insurance premium. The biggest increase occurs when your vehicle reaches between 7,500 and 10,000 miles. But even this is a mild change at just 3.57%. Plus, once you’re over 15,000 miles, the difference is only 1.38% each year. If you’re  thinking about swapping out an older car for a relatively new once, be sure to factor in a higher insurance premium.

Are you flexible with make and model?

A recent shortage in auto computer chips has caused global inventory issues, making both new and used vehicles extremely scarce. In fact, inventory is down 48%[4] from last year, with a particular shortage of trucks and SUVs. Prices, in turn, have subsequently increased. The average price for a new vehicle has exceeded $40,000,[5] which is a 10% hike over a two-year period. 

It may be worth waiting if you’re looking for a specific make and model and aren’t in a rush to purchase a new car. Otherwise, make sure you give yourself time to shop around. Look at dealers locally or try an online car buying service that will transport the vehicle directly to you.

Do you want any upgrades?

Financials aside, consider when it makes sense to get a new car based on the need for better upgrades. In some cases, this could be worth the switch (beyond basic vanity). For instance, you may wish to upgrade to a car that has better safety features compared to your current ride. 

Or perhaps the size of your car no longer works for your personal situation. You might have more kids now that require more seats, or maybe you have older kids driving themselves now and don't need such a big car. Alternatively, if your job requires you to meet with clients (such as a real estate agent or salesperson), it may be important to you to have a newer car that looks like it’s in good shape.

Bottom Line

Safety, cost, availability and comfort are all factors that play a role in determining when it makes sense to buy a new car. There’s no set formula to find the right answer for you, but you can use these scenarios to get a clear picture of where your car stands and when it’s a good choice to move on to your next vehicle.



  1. Car Depreciation: How Much Value Does A Car Lose Per Year? Carfax

  2. The Cost of Car Ownership Over Time. Consumer Reports

  3. The State of Auto Insurance. The Zebra

  4. Edmunds: Less choice, higher car prices in chip shortage. AP News

  5. As Chip Shortage Goes On, Cars Are Scarce and Prices Are Up. U.S. News