How long should I keep a vehicle?
This tool helps you determine the cheaper option: buying a vehicle and owning it for a long period, or selling and buying a new vehicle more often. Most likely, keeping a car for a long time is cheaper than buying and selling every couple of years, especially if the user buys and sells a new car every couple of years.
The following variables are the primary reasons why it is usually more expensive to buy and sell a car often:
Each time a new car is purchased, the user needs to take out a new loan and pay interest on the loan.
If new cars are bought, the biggest depreciation occurs in the first year of ownership.
Each time the user buys a car, sales tax needs to be paid.
Car insurance is higher for newer cars.
Vehicle licensing/registration fees are also higher for newer cars.
For an owner that buys more than one vehicle in the period, we assume that vehicle sale price, down payment, depreciation rate, and loan terms are the same for each new vehicle.