Tune Up or Trade Up: Deciding Whether to Upgrade Your Car

Deciding whether to keep your current vehicle or trade it in for a newer model is a significant financial choice. Understanding your car’s value and the associated cost of keeping it will help you make an informed decision that aligns with your financial and lifestyle goals.

Evaluating Your Current Vehicle's Value

The first step is to understand your car’s market value and how depreciation (the decrease in value over time) affects your equity. Depreciation is most considerable during the first few years of ownership, but it remains a factor throughout a vehicle's life.

Analyzing Fixed vs. Variable Costs

To see the full picture of what your car costs you annually, you can separate your expenses into two categories:

• Fixed Costs: These remain constant regardless of how much you drive. They include insurance premiums, taxes, and loan interest. As your car ages, insurance may decrease, but interest rates on older loans can often be improved.
• Variable Costs: These fluctuate based on usage and maintenance needs. Older vehicles generally require more frequent repairs and may be less fuel-efficient than newer models.

Try our Auto Loan Calculator to see how a different rate affects your fixed costs!

Understanding Hidden Costs

Beyond the obvious bills, consider asset costs. This represents the potential income lost when your money is tied up in a rapidly depreciating asset rather than invested elsewhere. While less tangible, this is a considerable factor in your overall net worth over time.

Making an Informed Choice

By weighing your vehicle's current value against its fixed and variable costs, you gain a clear view of the financial reality of your situation.

• If you decide to keep your car: You may be able to further reduce your fixed costs by refinancing your auto loan. Moving your loan to AERO Financial could lower your interest rate and monthly payment. Plus, you can get up to $500 back¹ on qualifying refinances to help offset those variable maintenance costs!

• If you decide to trade up: Securing a pre-approval before you visit the dealership puts you in a position of strength. Knowing your rate and budget beforehand allows you to focus on the vehicle that best fits your lifestyle and roadmap.

Whether you’re leaning toward the reliability of your current ride or the excitement of something new, your next move should be backed by a plan that protects your bottom line. Take a moment to see where you stand and get pre-approved to lock in your rate and move forward with confidence!

¹Offer valid for auto loans refinanced from another financial institution. Refinancing existing AERO Financial loan does not qualify for incentive. Minimum loan amount of $7,500 required to qualify for incentive. Incentive payout is based on the following total financed amounts: $150 for loans $7,500–$14,999; $250 for loans $15,000–$24,999; and $500 for loans $25,000 or greater. Applicable title transfer and registration fees will be deducted from the final incentive payout amount. Incentive amount will be deposited into primary AERO Financial savings account upon the time of loan closing. Incentive payments may be considered taxable income; please consult a tax advisor. All loans subject to credit approval and membership eligibility. Offer subject to change or end at any time without notice. Additional terms and conditions may apply.