You’ve been driving your car for years and it’s showing some wear and tear. Maybe it gets terrible gas mileage or lacks the latest technology and safety features. On the other hand, you’ve probably paid it off and would prefer not to make the monthly payments that come with trading up. Buying a new car is a major financial decision, so before you start shopping around, weigh the pros and cons and think carefully about what you can afford. Market USA can help you understand your options and determine whether a new car, used car or lease is right for you, or if you’re better off sticking it out and waiting a little longer.
Weigh Your Options
The decision to buy a new car vs. keep the one you’re driving comes down to a cost-benefit analysis. Most cars on the road today are about 12 years old, and the general rule of thumb is to drive a car until it clocks 200,000 miles, provided the vehicle remains safe, reliable and reasonably cost-effective to maintain. Ask yourself the following questions as you begin your search:
Could it be time for a new vehicle?
- Are repair costs becoming more frequent or expensive?
- Has your vehicle become less reliable than it used to be?
- Have your transportation needs changed since you purchased your current car?
- Could a newer vehicle help reduce fuel or maintenance expenses?
- Would the total cost of ownership fit comfortably within your budget?
Or does it make sense to keep your current vehicle?
- Is your vehicle still safe and dependable?
- Are maintenance and repair costs still reasonable?
- Have you recently paid off your vehicle loan?
- Does keeping your current vehicle support your budget and long-term financial goals?
All these factors play a part in your decision, but finances are probably most important to you. If the amount of money you’re spending to keep your current vehicle on the road is approaching the monthly payment for a new one, it may be time for an upgrade. Cars require more frequent maintenance as they age, so the cost will generally increase over time.
As part of your comparison, consider how financing may affect your total cost of ownership. Reviewing current auto loan rates and estimating your monthly payment can help you determine which vehicles fit comfortably within your budget. Bear in mind that the cost of a new car goes beyond a monthly loan payment. You'll also need to account for insurance, taxes, registration fees, depreciation, maintenance, fuel, and other ownership expenses. As a rule of thumb, keep your total vehicle costs, including the payment, insurance, fuel, and maintenance, at or below 15% of your monthly take-home pay. You should also examine any other debt you’re carrying, like a home mortgage or personal loan. To maintain a healthy budget, keep your family's total monthly debt obligations at or below 36% of your combined monthly take-home income.
When Is It Time to Buy a New Car? A Guide for Maryland and South Carolina Drivers
If your current vehicle is nearing the end of its lifespan, it’s time to begin thinking about a new car. New cars can offer better gas mileage and fuel economy, improved safety and convenience features, warranty coverage and added reliability.
Determine your annual car budget and compare it to what you’re spending on your current vehicle. What percentage of your total car budget are you spending to maintain the one you have now? What percentage are you comfortable spending? This is a personal choice and can depend on how much life you estimate is left in your current car. If a significant portion of your annual car budget is going toward repairs and maintenance, it may be worth exploring whether a newer vehicle could provide greater reliability, improved fuel efficiency and more predictable monthly expenses. Compare the cost of ownership for your current vehicle against the estimated cost of a replacement to determine which option makes the most sense for your situation. Once you've established a budget, exploring your financing options or getting pre-approved for an auto loan can help you better understand your purchasing power before visiting a dealership.
You may also opt for a new car if your lifestyle has changed since you purchased your last one. If you’ve moved from the suburbs to the city and street parking is tight, an SUV or truck might be impractical. Perhaps you’ve relocated somewhere snowy and need four-wheel drive to stay safe in the winter. You may have changed jobs or neighborhoods, increasing your commute, so you want a car with better gas mileage. While style and features are important considerations, it's equally important to choose a vehicle that aligns with your overall financial goals and monthly budget. If a new vehicle doesn't comfortably fit your budget right now, consider exploring a quality used car. This alternative can help you get the transportation you need while maintaining financial flexibility and staying on track with your long-term goals.
When to Buy a Used Car
If your current vehicle is becoming increasingly expensive to maintain, but a new car isn't the right financial fit at the moment, a well-maintained used car can be a great alternative. You can often find good deals on used cars coming off leases. Mileage tends to be low, and the dealer will have addressed any maintenance or repair work before listing the vehicle. Bear in mind, however, that more significant repairs will contribute to the list price, so try to find a car that went back to the dealer in good shape. If you have a specific vehicle in mind, you can look up its maintenance history on CARFAX. Members can access up to five free CARFAX reports to help research potential purchases. Simply enter the vehicle information and a Market USA Loan Officer will contact you to send you the CARFAX report.
New cars also depreciate rapidly, so buying used with lower mileage usually gives you more bang for your buck. Used cars tend to retain more of their value, since depreciation is most significant over the first few years of a vehicle’s lifespan. New cars typically lose about 20% of their value in the first year of ownership and an additional 15% over each of the next four years, according to CARFAX. Depreciation tapers off over time, so the longer you plan to keep your car, the less it will impact you financially.
Financing a well-maintained used vehicle can be a cost-effective way to upgrade your transportation while keeping monthly payments manageable. Comparing financing options before you shop can help you narrow your search and stay within budget. You may also want to explore a used vehicle auto loan before visiting a dealership to better understand your budget and purchasing power.
When to Keep Your Current Car
Have you paid off your current vehicle? If you're still making payments, it's important to understand how the remaining balance could affect your next auto loan. While you may be able to roll the outstanding balance into a new loan, depending on what you owe and the value of your current car, doing so can significantly increase your monthly payment and the total amount you owe It’s also possible that the amount you owe is too high to roll into a new loan.
This may happen if your vehicle is worth less than the amount remaining on your loan, a situation known as negative equity or being "upside down" on your loan. If the negative equity is too high, you may need to pay down part of the balance before you can sell or trade in the vehicle.
You may owe more than your vehicle is worth for several reasons, including financing over a longer term, making a small down payment, rolling negative equity from a previous vehicle into your current loan, or because vehicles often lose value faster than the loan balance decreases. Understanding these factors can help you determine whether you have positive or negative equity before you begin shopping for your next vehicle.
Before shopping for your next car, check your vehicle's market value and compare it to your current loan payoff amount. Kelley Blue Book is a great resource for estimating your vehicle's value and helping you understand your options. If you'd like assistance determining your vehicle's estimated value, contact Market USA and we can help you review current Kelley Blue Book valuation information before you begin shopping. Taking the time to evaluate your position now can help you avoid surprises and choose the financing solution that best fits your budget.
While a new car may be appealing, keeping your current vehicle is almost always the smartest financial move, provided the car is safe and reliable. Estimate the amount of money you’ve spent on maintenance for your current vehicle over the past year. If the cost of maintenance and repair is lower than your expected monthly payment for a new car, it makes the most financial sense to keep the one you have. If your current vehicle is a gas guzzler, a new car might save you money on fuel, but you’ll have to run the numbers to determine whether these savings would offset the cost of a new car.
Why do you want a new car? List the reasons and be honest with yourself. If it’s a matter of personal preference and nice-to-have features, carefully weigh the pros and cons and perform a cost-benefit analysis. Buying a new car is a significant financial decision, so it's important to make sure it fits comfortably within your budget and long-term financial goals. You should also be realistic about your vehicle's trade-in or resale value. While it can help reduce your out-of-pocket costs, depreciation may mean it's worth less than you expect.
Why Get Pre-Approved for an Auto Loan Before Shopping?
Before visiting a dealership, consider getting pre-approved for an auto loan. Pre-approval can help you understand how much vehicle fits comfortably within your budget, simplify the buying process and give you added confidence when negotiating the purchase price. Knowing your financing terms in advance can also help you compare dealership financing offers and avoid surprises at closing.
Pre-approval can help narrow your search by providing a clear price range, allowing you to focus on vehicles that align with both your transportation needs and financial goals. It can also make the purchasing process smoother by helping you complete some of the financing steps before you begin shopping.
Whether you're considering a new or used vehicle, exploring your financing options early can help you make a more informed decision and shop with confidence. Market USA offers financing for qualified new and used vehicle purchases, as well as tools and resources to help you prepare for your next vehicle purchase.
How to Estimate Your Monthly Payments
If you’ve weighed the options and decided a new car is right for you, calculate your expected monthly payments to help determine which make and model best fits your budget. To simplify your search, Market USA also offers a Car Buying Service powered by TrueCar, allowing you to research vehicles, compare prices and features, and shop with exclusive pricing tools designed to help you save on your next vehicle purchase. TrueCar can also help remove much of the stress and negotiation associated with buying a vehicle. By comparing prices from participating dealers and showing what others have paid for similar vehicles, you can shop with greater confidence and potentially save both time and money. TrueCar provides pricing certificates from participating dealers that can help simplify the purchase process. Simply take your certificate to a participating dealership to access the quoted offer and reduce the need for price negotiations.
Keep in mind that the purchase price is just one of many factors that contribute to your total out-of-pocket cost. Interest rates are also important to consider, as your car loan rate will depend on several factors, including term selected, rate discounts (generally .25% for automatic payment set-up and up to .50% discount for Relationship Awards1) and your credit history. Generally, a higher credit score and longer credit history can help you qualify for a better rate. According to Bankrate, the average credit score for new car financing in 2026 was 730, while the average score for used car financing was 670.
You can monitor your credit score and credit report for free through SavvyMoney within Market USA’s digital banking platform. SavvyMoney also provides credit monitoring alerts, personalized financial tips and a score simulator that lets you see how certain financial actions may impact your credit score, all without affecting your score. You are also entitled to one free credit report each year through annualcreditreport.com, and credit bureaus such as TransUnion, Experian and Equifax provide free credit reports as well.
If you have weighed your options and are in the market for a car and a car loan, Market USA can help you navigate this process. Login to apply online or contact us to get started.