Between a weak economy, rising prices on new cars, fuel prices, increased vehicle reliability in the past few decades, and the recent focus in our society on sustainability and making green decisions, we are all willing to drive older cars these days. However, the change in our car-owning habits will have consequences for our wallets. Here is what you can expect financially while Americans are learning the joys of old car ownership:
The Used Car Market
The last time I purchased a used car was in 2006, and at that time there were a number of great cars available that had depreciated rapidly. I was able to purchase my 1998 Mazda 626 at a bargain basement price, as it wasn’t particularly attractive to someone who had real money to spend on a car.
Since that time, the economy has taken a tumble and Americans are more willing to hold onto their cars. Add to that the Cash for Clunkers program from 2009, which removed 690,000 used cars from the road and market, and you’ll find your money not going nearly as far in the used car market as it once did. The supply of used cars is simply not there. This might send confirmed used car buyers to the lower end of the new car market, as the amount of money needed to purchase a reliable used car is getting uncomfortably close to the amount necessary for a new car.
There are some tricks for finding bargains in the new car market, however. For example, find out which cars are close to the end of their product cycle or even potentially about to be cancelled. Dealers want to clear the lots of these cars to make room for the shiny, new models and are willing to make deals to make that happen.
The Car Repair Industry is Affected Too
Repair shops and parts dealers love to see the American fleet of cars get older, as it means more business for them. It can also mean more choices for the driver with repair needs. Since everyone is dealing with the inevitable wear of an older car, you do not have to deal directly with your dealer for parts and service. After-market parts are a huge business, and there are any number of qualified mechanics who would like your business.
To make the most of these options, do the research on your car to know what types of maintenance and repair you are likely to face and where you can go for them. If you comparison shop on parts and service prior to the moment you’re broken down by the side of the road, you’ll be in a better position to keep your car running for years to come.
Unfortunately, an older fleet of cars and the subsequent need for parts also means that vehicle thefts could potentially go up in order to feed chop shops. It may feel strange to have top-of-the-line insurance on a decade-old car, but if you keep your vehicle in excellent condition and hope to keep driving it indefinitely, you might want to take a second look at your insurance policy. Know what your car’s Blue Book value is, and take the time to determine if you would be able to replace your car for that price. (And that’s assuming your insurance covers vehicle replacement.)
When it comes to insurance for an older car, it’s important to remember that your car is now worth more than a car the same age would have been in the past. So insure your car accordingly.