When should you replace an old car?

How do you know when it's time to get rid of that old car? Compare the pros and cons of owning and insuring a new vehicle.

Did you know that older cars are 4 times more likely to be in a fatal crash than new cars? Yet, the average age of a car in Australia is 9.9 years old. Some people are even driving cars that are over 12 years old!

If you're not already thinking about replacing that old car of yours, maybe it's time you consider it. Here's what you should know about owning and insuring a new car.

Factors to consider when upgrading your car

• Safety. Statistically, newer vehicles are safer. They benefit from modern advancements in autonomous safety technology and driving aids. Car body design and construction has progressed to improve rollover safety and crash performance. In addition to outdated technology and design conventions, an ageing car's crash safety could be weakened by rust. Researchers discovered that occupants in a vehicle peppered with corrosion could face a 20% higher risk of death. The Australian Automobile Association estimated that shaving just a year off the average national fleet age would save 1,300 lives over the next 20 years.
• Repair costs. Generally, as a car ages, it will begin to degrade. Things will start going wrong, rust will set in and you'll find yourself becoming familiar with the mechanics at the local garage. Calculate how much you spend per month fixing your car, it could work out to the cost of a finance deal on a new car. New cars come with long warranties these days, up to seven years for some models. This gives you peace of mind, knowing that you're covered should the engine implode or the turbocharger decides to eat itself – both big ticket items if you have to foot the bill. A newer car is much less likely to break down, too, saving the hassle and time of having to put it on a tow truck and haul it to a garage.
• Lower fuel costs. Fuel is the second largest expense that car owners have to shell out for. Over the past few years, car manufacturers have really pushed engine efficiency, by moving to lower capacity engines with comparable power outputs. Thanks to start-stop systems and eco-modes working in tandem, a new car can dramatically slash your fuel bills.
• Insurance. Did you know that a new car purchase could impact on your car insurance premium? Simple things like the body colour can send the price rocketing, with black vehicles carrying higher insurance premiums. A white car is 47% less likely to be involved in a smash, so insurers may discount your policy by up to 10%. White cars are also easier to repair, which is cheaper for insurers. Also, a lender may require you to have comprehensive insurance. Finally, buying a car on finance could incur an extra $200 on your annual premium.
• Outstanding finance. If you have outstanding finance on your current car, things can get a little tricky. You need to make sure that selling your old car or trading it in will cover the remainder of your loan. Don't forget to factor in any early settlement charges. If you find that your car has a track record of reliability and is cheap to run, then it may not be worth upgrading from a financial point of view.
• Improved equipment. Technology moves quickly. Cars for sale today carry plenty of useful entertainment and comfort-enhancing equipment that were optional extras in the past. It's not uncommon to get phone connectivity, steering wheel controls, cruise control and electric windows as standard. Some automakers even include reverse cameras by default. These upgrades make newer cars more enjoyable and pleasant to drive.

If you find your car is lacking in any of the areas above, perhaps it is time to replace it!

Save money on insurance for a new car

Right now is a great time to purchase a new car, with most brands running End of Financial Year (EOFY) deals. You could save on average $3,400 on a new car purchase. Dealers may also be running promotions to include things like extended warranties or extras like alloy wheels and parking sensors. Here are a few more ways you can rack up the savings by carefully selecting your new car and insurance provider.

• Go for a cheaper colour. White cars are more visible on the road and straightforward to respray, so they should be cheaper to insure.
• Opt for lower specifications. A lower end model will cost less money initially and be less desirable to thieves, which could add to your insurance savings. As a bonus, lower spec vehicles tend to have smaller engines, again saving on car cover. Sport or luxury models will be more expensive to insure versus standard trim.
• Security. Make sure your new car has an alarm and factory fitted immobiliser, these devices help to deter thieves and will lessen your insurance bill.
• Choose extras wisely. This applies to both the car and your insurance. Optional extras add value to the car, while insurance add-ons can quickly raise the amount you have to shell out.
• Shop around. Finally, shop around for your insurance. You could save a substantial chunk of cash!

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