I can afford a new car but don’t need one. Should I buy?

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Q. I’ve had my car for 10 years. I paid it off five years ago, and I continued to put my car payment into a savings account, like you suggested years ago. Now I have this money in an account ready to spend. My car is still working fine, but I’m tempted to buy something new even though prices in general are high with inflation. How can I decide if I should spend the money even though I can afford it?
— Driver

A. We’re really glad to hear you’ve been saving.

Once you’re used to making a monthly car payment and you pay it off, continuing to pay yourself to a dedicated account for a future car purchase is a great strategy.

When it comes to whether or not you should buy a new car, it really comes down to how you feel about your existing car, said Bill Connington of Connington Wealth Management in Paramus.

Is it starting to show wear and tear? How has the maintenance been? Is it starting to break down?

“The fact that you can afford another car due to saving you car payment is great, so with those dollars and trading in the old car you should be able to purchase a new one that could last you the next 10 years and be more reliable going forward,” Connington said.

As you noted, prices have gone up. While you might be paying more for a new car, you’ll also get more for your trade-in, he said.

And if you go to a dealership as a cash buyer, the dealer may be more willing to work with you on price, he said.

“But again, it all depends on how you feel,” he said. “That is how you really decide: Do I want to worry about repairs in a 10-year old car or purchase a new one that would provide me with warranties for a period of time?”

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This story was originally published on Sept. 7, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.