With the cost of living increasing dramatically over the last few years and inflation reaching historical highs, saving money is a priority for many households. If you’re looking to save money by trading in your large family car for a smaller one, there are a few key points to consider before making the move.
“The primary cost of ownership with vehicles is petrol. Fuel prices have doubled in the last 5 years and there doesn’t seem to be an end in sight, ” points out Barend Smit, Marketing Director of MotorHappy, a supplier of motor management solutions and car insurance options. “Fuel efficiency should play a major role in choosing your new car.”
Furthermore, with the current advances in automotive hybrid and electric technologies, consider downsizing to a PHEV or EV – it may save a lot of money on fuel in the long run.
After fuel costs, maintenance is the second biggest cost of ownership. Premium car brands generally come with higher maintenance costs, both in parts and labour costs. “Car models with low sale numbers generally require longer waiting times to source parts and could have higher labour costs for replacement and repairs. Choosing a commonly available car model usually translates into reduced long-term ownership costs,” says Smit.
Car services and regular car maintenance are the hidden costs of car ownership that many people tend to overlook. “Never try to avoid taking your car for services or maintaining to save money– this could lead to more expensive issues down the line,” he cautions. “Before investing in a new car, investigate the car manufacturer’s recommendations around maintenance and services. A Service Plan or Maintenance Plan offers great value for money with easy monthly payments that allow for better budgeting.”
Smit says to take some time to analyse your lifestyle needs and how they may have evolved since the last time you bought a car. If kids have moved away, do you still need a large class 3-row SUV? If you are city driving 99% of the time, is there a point to having an all-wheel-drive or 4X4?
“When downsizing, consider the actual passenger and luggage space you need. After an honest analysis, you might realise that in fact, a hatchback with a sub-2-litre engine will work just fine for your needs. This change will also translate, in some cases, to a lower insurance premium and better fuel economy.”
Another important factor to consider is whether or not to buy a new or previously loved car. The current computer chip shortage and dramatic increase in raw material costs caused an increase in new car prices. “The used car market can provide the ultimate vehicle to downsize to, featuring all the perks you need and at a great price, compared to a brand-new vehicle from a dealership,” says Smit. “Before going directly into a dealership, check some of the online used car sale websites for offers that will suit your budget.”
The MotorHappy online marketplace features thousands of new and used cars. If you’re considering financing your car, use the MotorHappy Finance Calculator to help estimate the monthly repayments for the new car.
When it comes to trading in a car that is financed, be wary of the timing around trading in your vehicle. Consider trading your car when the value of the vehicle is either equal to or more than the amount you owe the bank. This is called the break-even point, and it’s usually around halfway through a 72-month loan.
Another important factor to consider when downsizing your vehicle is the resale value.
“Your goal is to find a car that fits your lifestyle, lowers your monthly budget, and has great resale value. When downsizing your vehicle, could also mean sacrifices in-car performance and comfort. As with any car purchase, it’s important to consider the implications of driving a smaller, more economical car,” concludes Smit.
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