How long should you keep a new car before trading?

The burning question of when to trade-in is often brought up in fireside chats, We spoke to a few dealers to get the low down on how long is long enough.

Lawrence Minnie

13 Sep 2022 · 22:06Automotive News

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It is an unfortunate fact that most new cars will lose up to 20% of their value as soon as they drive off the showroom floor. This means that you really should keep your car for a few years, or at least until it is sufficiently paid up before you trade it in. Doing things this way ensures that you get to enjoy all the benefits of your ownership. If you can't or aren't willing to wait that long, at least make sure you don't owe more than the car may be worth.

As a general rule, you're going to get less trading in your car than selling it yourself. The dealership has to factor in reconditioning and making a profit on the vehicle.

It is not recommended to trade in your vehicle if you still have a balance on the loan and have not yet paid off the interest and a large portion of the loan amount. If you have a large outstanding balance, this means you still owe more money than the car is actually worth and are going into a new finance deal with money still to pay up! If you trade in now you will just be getting deeper into debt.

You should reach out to your credit provider to find out how much you owe on the remainder of the vehicle finance agreement and compare that to the estimated value of your car on a trade-in, and when the value is higher than the amount you owe, consider that a go-ahead.

You can now use that to go shopping for a new vehicle. You need to decide when you can get the most return, Don't wait too long! Keep in mind that your car declines in value with each passing year and each additional kilometre and most dealers and finance houses will shy away from cars approaching 8 years or 200 000kms.

Any information herein is not intended nor does it constitute financial, insurance, tax, legal, investment, or other advice. Before making any decision or taking any action regarding these please consult a suitably qualified professional.

You can find more assistance with these other finance tools from AutoTrader.

https://www.autotrader.co.za/car-finance-calculator
https://www.autotrader.co.za/value-my-car
https://www.vehiclecheck.co.za/
https://www.autotrader.co.za/sell-my-car

Written by Lawrence Minnie

Lawrence has been involved with motorsports for almost 30 years. Whether it's two wheels or four, if it has an engine, he will try to race it. This love of motor vehicles has led him to ride, drive, film, photograph, and write about his passion. Freelance for a while but now a permanent fixture on the AutoTrader team for over 7 years, Lawrence contributes written, photographic, and video content for AutoTrader and AutoTrader Bikes.Read more