When is the best time to sell your car?
Economist Mike Schussler can help you decide whether you should sell now and make extra cash, or if you should drive your car until the doors fall off.
JOHANNESBURG - Is there a financial logic to upgrading or selling your car?
'The Money Show' spoke to economist Mike Schussler about when the perfect time is to sell a car.
Schussler said you have to work out what the utility value of the car is and that utility value is going to be higher than the value of the car.
"Generally most people pay off a car over five or six years and there are model upgrades every seven or eight years so when it gets to that upgrade, you could get another car."
The economist advised that what motorists want to optimise is the difference between the original price of the purchased car and the subsequent trade-in value.
Schussler conceded there is no obvious equation for when there is a best time to sell a car.
"Car prices depreciate and I keep my car for as long as I can. Car prices depreciate in the first year and continue to do so quickly after that. Stats SA gives a negative car price year-on-year. They only use the first three years of cars so that gives you a good idea that in the first three years, the car depreciates rapidly."
The economist warned that there will come a time when the cost of keeping the car will increase.
Consumers must remember that when you buy a new car, it loses 14 percent of the price and 20 percent when you drive it out of the showroom.
At the end of the day, a car is a liability but it is a utility liability so we do need it.
Schussler advised people to buy a reliable car that is fuel efficient and drive it until the wheels come off.