Cars are an essential mode of transportation for Canadians. Our cities are far apart, and our population doesn’t always support reliable and fast public transportation. Cars are ubiquitous in Canada, and they aren’t cheap. There were 26.2 million cars on the road in 2020, and Canadians spend an average of 20% of their take-home pay on maintenance.
For a price that high, you want your car to be reliable and operate without the need for expensive repairs. When your vehicle gets a little older, you might start thinking about when is the right time to replace it and whether it’s time to buy a new car – or whether you should stick with your current car a little longer. Since Canadians own an average of 6 cars in their lifetime, odds are you’ll need to replace your current vehicle at some point. Here are five signs it’s time to buy a new vehicle.
1. You’re spending more on repairs than it’s worth
Older cars can have many benefits, including reliability and lower cost. But when you face a hefty repair bill for a vehicle that is older, you might ask yourself: should I repair my vehicle or buy a new one?
A common rule of thumb is that when you start spending more on repairs in a year than your car is worth, it’s time to replace it. If you aren’t sure what your vehicle is worth to make this comparison, use a valuation website like the Canadian Black Book. These websites can help you estimate your car’s value and determine if it is more or less than your annual repair budget.
2. The vehicle is unsafe
Safety is an essential part of operating a motor vehicle, and it’s imperative that your car is safe to use, both for yourself and for everyone else on the road. Depending on where you live in Canada, you may be required to have your vehicle inspected periodically to make sure it is roadworthy. If your province doesn’t need these inspections, it’s up to you to ensure your vehicle is safe to operate. If it isn’t, you should get the required repairs or consider selling your vehicle for a more reliable option.
3. The vehicle no longer meets your needs
Sometimes the conversation around selling a vehicle doesn’t arise because of problems with the car itself, but because your needs have changed. For example, perhaps you need a more fuel-efficient vehicle due to a new job with a longer commute, or your family is expanding and your lifestyle is more suited to an SUV than a sedan.
If your lifestyle changes, take some time to consider what type of replacement vehicle you might need and take care to explore all of your options.
4. Your financial circumstances have changed
Perhaps your lifestyle hasn’t changed, but your financial circumstances have. In this case, it might be time to change up your vehicle. If money is tight, an excellent way to free up extra cash in your budget is to buy a more fuel-efficient vehicle or downgrade from an expensive car to a more affordable used car.
On the other hand, maybe your finances have changed for the better. In this case, consider upgrading your vehicle. A good rule is that you shouldn’t spend more than 15% to 20% of your income on transportation. So as long as your new vehicle is within that recommendation, now might be a good time to upgrade.
5. A new vehicle is available
Before the pandemic, it was possible to buy a new vehicle by just walking onto a dealership lot and choosing one of the many new cars available. That’s not the case today, where global microprocessor chip shortages have restricted the supply of new vehicles. It’s common to have to wait months for a new car, and this suppressed supply has also driven up the cost and demand for used vehicles.
Suppose you have the opportunity to replace your vehicle, and a suitable replacement is available. In that case, you should jump on that opportunity because it could be some time before you find another car that meets your needs and is reasonably priced.
For many Canadians, deciding when the right time is to buy a new car will depend on many factors. Odds are, you’ll mull the idea over for weeks, or even months, before making a final decision. The info above can help you decide whether now is the right time and what to consider when buying a new vehicle.