Smart Drivers Wait Longer to Replace Cars

Of course, your old car continues losing value as well. But the steepest losses come early in a car’s life. The annual losses get much smaller as the car ages.

And in reality, the new car probably will cost more to insure, and if you take out a loan to buy it, there will be interest charges as well.

The average five-year new-car loan charges about 6.6%, according to the BankingMyWay.com survey. The Auto Loan Calculator shows this loan would charge just more than $4,000 in interest during the first four years you owned the car. You’d probably have no interest costs on the older car.

Obviously, different assumptions would produce different results, but it’s pretty hard to make the numbers justify a new-car purchase on a purely financial basis.

Use the auto loan search tool to find the lowest auto loan rates available when you weigh the options, as many lenders beat the national averages. Bank of America (Stock Quote: BAC), for example offers five-year loans at 4.6 percent, and National City Bank (Stock Quote: PNC) has one at about 5.3 percent.

Credit unions have some of the best deals.