Here's What Happens When You Replace an Old Car With a New One

Some people get attached to their cars and have a hard time saying goodbye. But if you have an older car that's starting to not drive well, then it may be time to replace it with a new model.

Of course, these days, buying a new car can be an expensive prospect, so your vehicle ownership costs might rise when you replace an older car with a new one. But while some of your expenses might increase, others might go down.

Prepare for certain costs to rise

During the first quarter of 2023, the average monthly new car payment rose to $730, says Edmunds. This doesn't necessarily mean that a new car of yours will result in an auto loan payment of $730 a month. But if you were still paying off your older car, you're likely to see that your monthly loan payments are higher with a new one.

The same is likely to hold true for your auto insurance. The cost of insurance hinges heavily on the value of your vehicle. So if your old car had a value of $10,000 and your new car has a value of $40,000, it stands to reason that your auto insurance company might jack up your premium rates to account for the higher payout it might have to hand over should your new vehicle get totaled.

Of course, you can always shop around for new insurance should you choose. The point, however, is that it's generally more expensive to insure a new vehicle than an old one.

Some of your expenses might fall

While you might end up with higher car payments and auto insurance costs upon getting a new car, you might end up saving in other ways. First, a new car is unlikely to need major repairs that aren't covered by a warranty for at least a few years. With an older car, you might spend a lot more money on repairs because you're out of warranty, and also, because components are more likely to wear out.

Also, a brand-new car might cost less to maintain than an older one. However, in some cases, you might end up spending more, such as if your vehicle is a higher-end model. In that case, things like a basic oil change might result in a higher credit card tab. (For example, Kelley Blue Book says the average cost of an oil change is $35 to $75, but for a BMW, you might pay between $135 and $175.)

All told, replacing an old car with a new one will, for the most part, mean spending more money to own a vehicle. But you might also gain peace of mind, and that's important.

If you rely on your vehicle to get to work, for example, you don't need the daily stress of wondering if today's going to be the day that your older car refuses to start. And if your car doesn't accelerate well or has other drivability issues due to its age, that could actually make for an unsafe situation. So if your older car really has seen better days, it may be time to swap it for a newer model, even if it means bearing higher costs in the process.