When is it Time to Buy a New Car? An Accountant Weighs In

One of the strangest things about becoming an adult has been learning that others have to get by without an accountant in the family. Growing up, I had two accountants in the house (my mom and my stepdad), and it’s been extremely beneficial.

In addition to learning about spreadsheets a little earlier than most other kids, I’ve also had the advantage of running most of my personal finance questions (like “When is it time to buy a new car?”) past people who not only have my best interests at heart, but are also very good at balancing budgets. Today, I’m extending you the same advantage I’ve had all my life, in the form of my stepdad, Chartered Accountant Marc Renaud, who, for the amount of time it takes you to read this article, is your stepdad, too!

Whether you’ve recently gotten some bad news about an upcoming repair or you’re just curious about a new car, if your focus is on your budget, Marc says you should be trying to answer four key questions.

Question 1: How Reliable is Your Car?

The first question you should be asking yourself isn’t about money at all. Instead, if you have the means to replace your car, your first question should be, “Can I get where I need to be?” For Marc, who has long lived in the Greater Toronto Area but who drives to Ottawa a handful of times a year to visit family, his first question was always, “Could I drive to Ottawa tomorrow?”

“When the answer is no,” he explains, “it’s over.”

If you’re thinking about getting a new car and your current vehicle isn’t up to the task of getting you where you need to be, then it’s time to make the switch. Questions of financial advantage go out the window. Your stepdad says you need a new car.

Question 2: How Much Would a New Car Cost?

If you’re still here, it’s time to ask how much a new car will actually cost. Your monthly payments will be the baseline against which you measure your current car, since the biggest difference makers for your monthly budget are likely to be expensive vehicle payments for a new car, or bigger repair bills for an older one. So, those are the factors you should be focusing on.

While costs like fuel consumption, insurance, and maintenance may vary between a new car and your current one, under normal circumstances, these differences will be smaller than the two listed above. You need insurance and fuel regardless of what decision you make, but if you buy a new car, you’re unlikely to spend any money repairing it, and if you have an older one, you may not be making loan payments.

For now, then, we’ll put smaller factors aside and focus on the larger issues of car payments and repairs.

Question 3: How Much Does Your Current Car Cost?

If, for the sake of argument, we assume that you’re interested in a new vehicle with monthly payments of $500, you should be trying to average out your current vehicle’s repair bills so that you can see how much you’ve been paying per month.

Let’s return to our above scenario. While changing your tires, your mechanic finds something wrong with your 10-year-old car, and you’re facing a $3,000 repair bill. Let’s say this is the only repair you’ve had this year, that means that you spent just $250 per month on repairs in 2025. Add that number to any loan payments you have to make (all the better if you’re debt free) and see how that compares to the $500 per month you’d be spending on that new car you’re interested in.

A $3,000 repair bill may be a tough pill to swallow but, assuming you’ve finished paying your car off after 10 years of ownership, you’ve spent half as much on this car (per month) than you would have on a new one, so you’re better off sticking with it.

Question 4: How Comfortable Are You With Repairs?

Unfortunately, there are always complicating factors. First of all, the frequency with which vehicles face issues follows a hockey stick curve. That is to say, for the first several years of a car’s lifecycle, repair costs should be close to zero. Once things start going wrong, though, a lot tends to go wrong. When it rains, it pours. While that $3,000 repair bill may have been a fluke, Marc says he’d start keeping an eye on it to make sure costs don’t spiral out of control.

He also says you don’t have to wait until your repair bills reach 100 per cent of a new car’s monthly payments to make the change. In fact, you probably want to trade your vehicle in before expensive problems start piling up. By the same token, newer vehicles are generally worth more than older ones, so you may be able offset more the cost of purchasing a new vehicle (thereby lowering your monthly payments) by trading it in or selling it earlier.

Marc has found over his years of owning vehicles that once keeping an older vehicle on the road costs about 60 per cent of a newer car’s monthly payments, he is ready to make the switch. In our above example, he would start looking at buying a new car once he starts spending more than $300 per month on repairs.

He admits, though, that figure isn’t scientific. It’s just where experience has taught him he’s comfortable making a change. He says the window for change should be somewhere between 40 and 70 per cent, though. If repairs and payments on your current vehicle cost you 30 per cent of what a new car would (a measly $150 per month) and you decide to trade up, you just want a new car. There’s nothing wrong with that, but you aren’t optimizing for finances.

Meanwhile, if your current car costs you $450 a month in repairs, then you’re spending 90 per cent of what it costs to run the new vehicle you’re interested in, and it’s been time to change for a while. You’re putting money into a car that’s getting increasingly expensive to keep on the road while it continues to depreciate in value, and is exposing you to a lot of mechanical inconvenience.

Final Thoughts

Although big repair bills can be scary, and too much time at the shop can have you running for the dealership, Marc says you shouldn’t shortcut the decision tree.

To recap, ask yourself: Could you jump in your vehicle today and reliably get where you need to go? What would it cost to buy a newer car (you can use an automaker’s online configurator to start getting some ideas)? How much are you spending on your current vehicle? And finally, how comfortable are you with repair costs?

Ultimately, the specific answer to the question of when it’s time to change vehicles is personal, but the goal of the exercise is simple.

“At the end of the day, what you want to do is you want to drive a vehicle for as long as possible without it costing you a lot of money,” your fleeting stepdad says.