As a current or prospective car owner, you might be wondering how long you should keep your car, or if it might be the right time to trade it in for a different vehicle. While the answer often depends on your own preferences and circumstances, it might be beneficial to understand the average length of car ownership. The good news is that cars seem to be lasting longer, as recent data shows that the average age of cars on the road in the U.S. rose this year to a record 12.5 years. Let’s learn more about the average length of car ownership, and how this might affect your own decisions as a car owner.
How long should you keep a car?
The truth of the matter is that there isn't a single, definitive answer as to how long you should keep a car. Essentially, you could keep your car for as long as it continues to reliably and safely serve its functions. If you’ve been diligent with the maintenance schedule and your auto loan is paid off, it might benefit you to hang on to a car that’s still running just fine instead of financing a new one.
That being said, life circumstances change, and you might end up needing to sell your vehicle after a few years. For example, maybe your family has grown (congratulations!), and you now require a more kid-friendly vehicle with extra seating and space for car seats. Hypotheticals aside, you can see how deciding how long you keep your car may often be a personal decision. Here are some other common reasons you may be wondering about how long to keep a car:
- Safety concerns: Safety is always a top priority for drivers. Maybe you’re considering getting rid of an older car because you’d like to take advantage of advanced safety features like blind spot detection, or just generally feel like you need a vehicle with a higher safety rating.
- Major accidents or damages: Cars involved in a collision may require costly repairs, to the point that it may be cheaper for someone to replace the vehicle altogether.
- Lifestyle changes: As we briefly covered above, lifestyle changes can often necessitate changing your vehicle to better suit your needs. As another example, consider a pickup truck owner who lives in the countryside but is now moving to the city. It’ll likely be easier to find street parking for a sedan than a large pickup, which could lead them to swap their truck out for something more maneuverable.
When should you trade in your car?
The shortest answer is that you should trade in your car while it still has trade-in value. Knowing when you should trade in a car is somewhat similar to knowing how long to keep your car, in that it may often be a personal decision. If you’ve decided that now is the right time to change cars (perhaps out of necessity), then it might make sense to trade in your current car to potentially save space in your garage (and maybe some money on your trade-in).
If you’ve decided that trading in your car is the right move for your circumstances, there's a couple of ways you can do it.
Trading in your vehicle at a dealership
If you plan to trade in your vehicle at a dealership, they'll likely look at things like your car’s mileage, overall condition, model popularity and age to determine its actual cash value (ACV). To put it briefly, the ACV typically refers to the car’s current market worth based on its condition.
Dealers understandably place a high level of importance on a car’s ACV. When someone trades in a vehicle, dealers typically re-condition it before it’s put out for sale on the used car lot. As such, dealers are typically very diligent to estimate your vehicle’s ACV accurately since it helps them determine their own potential profit margin.
It may help to have your vehicle appraised by a third-party inspector so that you have an impartial assessment of its estimated value. This may be a negotiating chip you can bring to your dealer if you plan to counteroffer. Just know, however, that you might find them unwilling to budge on their calculated price. In this case, you might be able to pocket more cash by selling your car privately.
Trading in a vehicle with a loan
It’s possible to trade in a vehicle with a loan attached, but it may involve some calculations to understand how much equity you’ve built on the asset. This involves finding the difference between your car’s current value and the remaining balance on your auto loan. The difference will result in either:
- Positive equity: This is when your vehicle is still worth more than your remaining auto loan balance. This would translate into credit that you can put toward the purchase price of your next car.
- Negative equity: If the car’s value is worth less than the amount you still owe on your loan, you may find yourself “upside-down” or “underwater” on your car loan. In this case, it’s less beneficial to trade in as you’ll receive no credit to apply toward your new car. Not only that, but you’ll still have to either pay off your former creditor or roll the previous loan balance into a new auto loan.
Selling your vehicle privately
Selling your car privately (assuming all loans on it have been paid off) may allow you to potentially bring in more cash than you’d be able to get at a dealership, but it could require a little extra legwork. For instance, you’ll need to put effort into marketing your car to prospective buyers by creating an effective “for sale” ad. Having records of previous repairs, maintenance visits and ownership history can also go a long way to reassuring potentially skeptical buyers about the car’s present condition and why you’re selling it.
How long should your car last?
How long your car should last likely depends on several variables. Perhaps most importantly, this includes how well you maintain it. That said, if the average car on the road is about 12.5 years old, you might expect to get around this much out of a new car you buy (provided you’ve also been following manufacturer’s guidelines for maintenance to keep it in good condition).
Newer vehicles may also be built to last longer than ever before, with more efficient designs and advanced technology. Electric cars, which have a simpler engine design, may require even less maintenance in some respects than their gas-powered counterparts.
Sadly, there’s no surefire answer on how long a car should last. Still, if you’re looking to extend the life of your car while also potentially increasing the resale value of your car, here are a few things that may help:
- Staying consistent with your routine maintenance schedule.
- Learning how to apply defensive driving tactics and avoiding distracted driving to potentially reduce the risk of collisions.
- Cleaning your car routinely and being mindful of small ways to clean your car to avoid excessive buildup of dirt and grime.
- Educating yourself and implementing various maintenance tips, like staying on top of oil changes, which can go a long way toward the health of your vehicle.
If you’re a new or prospective car owner, it’s only natural to be curious about how long your car might last. With the average length of car ownership rising, you can likely expect new, well-maintained cars to stay on the road longer (on average) than they have in the past.