Thinking of keeping your old car or buying a new model?

If you are a person who describes your vehicle with a nickname instead of the make designated by the manufactures, you may find yourself hesitating before disposing of it.

The temptation to trade it in is tempered by not only the costs involved in the purchase of a newer one, including the price, insurance, licensing fees but also the affection you feel about how well it has served your needs.

As the owner of a 1994 Chevrolet conversion van with 85,000 miles on it, named Big Mama because it is seventeen feet long and comfortably seats seven people, I decided to keep it after checking current models that cost about $40,000. Before arriving at the decision, I went through a checklist of pros and cons weighing whether the cost of buying a new vehicle would be offset by maintaining the older one.

Some of the items I considered were:

* Cost of a new vehicle would include the down payment plus interest on the loan. Interest makes up a larger percentage of the monthly payments initially. That means that more interest is paid during the early years of the loan, coming down with time. Instead money invested in certificates of deposit or similar products which compound daily, would gain value. In addition, interest on vehicle loans is not deductible as it with a home mortgage so there is no income tax savings advantage.

* Depreciation begins the moment the vehicle is driven off the dealer's lot. In the first five years, that would be 48% or almost one half of its value most of which occurs in the first three years. Within sixty months, a $20,000 car would be worth a little more than $10,000.

* A well-maintained vehicle, such as mine, should still be running even after having 100,000 miles on the odometer. In the absence of a really huge repair bill, and with the help of a reliable mechanic to keep it in good working order, it would still be cheaper to keep it.

* Insurance costs and licensing fees would be almost triple of the present charges.

In comparison with a new vehicle:

* If I paid cash, I could eliminate the interest on the loan compared with how I could invest the money.

* With the cost of gasoline getting close to $4 a gallon, getting better mileage would offset some of the new vehicle investment.

* The new car may come with a warranty that could cover the cost of maintenance and repairs for a period of time.

Other things to consider in deciding whether to keep your old vehicle are its age, the mileage, and whether you live in an area with adverse weather conditions such as snow which could result in corrosion from road sand and salt. And as you analyze the answers and make the comparisons, you may find, just as I did, that the old faithful sitting in your garage is the best choice. Or not!

Learn more about this author, Martha R Gore.
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