When is it time to buy a new car?

Astute buyers know the best time of year to be purchasing a new car. That's when the best deals are to be had.

But when is it time to consider buying a new car (or a newer car, at least) on your own personal timescale?

According to conventional wisdom, the longer you can keep your old banger on the road, the more money you save.

But sales staff at dealerships will also tell you that the longer you delay trading up to a new car, the more you'll have to borrow to bridge the gap between the new-car purchase price and the depreciating retained value of the current car.

Which is right?

Basically, there's some truth in both arguments.

When it comes to selling a car, there's no fixed tipping point for timing. It's not as if you wake up one morning, look out the window and find it's the perfect day to be selling your current car or trading it for a newer model.

Of course, if your third child is born the day before you might be suddenly disposed to the idea of buying a new car that's larger.

That's the point: a lot of the decision making will boil down to your own personal situation. There are many factors that will influence the timing of your next automotive purchase (and the sale of your current car).

Also influencing your decision will be economic factors. Is the Aussie dollar down in value? Imports will cost more and there'll be little room to haggle for a lower transaction price.

Is it a seller's market? A dealer won't let a car go cheaply if the sales staff is surrounded three deep in buyers waving wads of cash to buy the latest and greatest new model.

If you accept the salesperson's argument that trading more often means borrowing less... there is an obvious flaw in that logic if you haven't paid off the loan for the car you're selling. The total sum borrowed for the new car may cost more than the amount borrowed previously for the current car.

Furthermore, the interest payable on your loan may offset any savings gained by selling before the car's resale value hits rock bottom.

As a further qualification, if you can comfortably handle a level of monthly debt, perhaps subscription services may have an alternative to offer you.

If your car is costing literally thousands each year to keep on the road, and by no means is it an appreciating asset, it might be time to let go of the old dear.

Have you replaced the CV joints of your car, only to have a water pump fail a few months later? Costly repairs can occur in rapid succession, as a car reaches a certain age. Depending on whether the car has lived in the country and travelled mostly open-road kilometres, or whether it's a city car, that 'certain age' could be up to 20 years or it could be within five.

It's not just the direct monetary outlay that you need to consider either. How much is your own time worth, for instance? If you're off the road for weeks at a time, while saving money to have the car repaired, there's a cost to you involved in that – because breakdowns always happen when you have plenty of money put aside to fix them, right?

Your car may also be off the road for weeks while waiting for parts to be supplied, or while wrangling with a dealer over the warranty provisions, or there may be other reasons for the car being holed up in a workshop for an extended period while you're consigned to taxis and scheduled public transport. Just getting around without a car can rapidly become quite expensive if you should have to hire a car.

According to market research authority Canstar, a secured loan for a new car costing up to $30,000 on the road could be arranged for a monthly repayment of $601, based on a 7.5 per cent interest rate, payable over five years.

That works out at around $7200 a year. If you're paying that much or close to it, for a car that is worth less than that annual expenditure and is not a collectible model, you could easily justify ditching the current car and pick up something new, reliable and likely more comfortable. Especially if the new car is going to be cheaper to run as well – in terms of fuel consumption and car insurance.

So don't mess around; sell that depreciating German limousine from the late 1980s and relax in the knowledge that your new car won't leave you stranded and won't cost a fortune to own – but will likely be quieter and better equipped.

It's not just high-end prestige models that outstay their welcome in your garage of course. A cheaper second-hand car that has provided good service in the past may be well past its prime by the time its actual market value falls below $3000.

Any money spent on mechanical repairs for a car worth so little is money flushed down the drain.

Arranging a $10,000 secured loan – an amount which will buy any number of small or light hatches less than five years old and with fewer than 60,00km on the odometer – could cost less than $200 a month.

Perhaps you're willing to pay more for a new car that's a recent model and features all the very best safety kit. You care about the young ones and your partner, and spending more on a safer car is a premium for a kind of insurance policy.

Passive safety has come ahead in leaps and bounds in recent years. If you're driving a small used car that's over 10 years old, it's unlikely to be rated better than four stars by safety authority ANCAP.

To be frank about it, your Japanese, Korean or Thai-built used car of 10+ years is a better than even chance to have missed out on a five-star ANCAP score at the time. That's particularly the case if the vehicle is smaller. A notable exception to the rule is the Mitsubishi Lancer. Upgrading to a used car that's less than 10 years old can be easily accomplished for not much outlay – and your peace of mind will be worth every cent.

What may have seemed perfectly acceptable just a few years ago may pale in comparison with today's state-of-the-art comfort. That widely admired small Japanese car from the mid-1970s now seems ludicrously noisy at highway speeds, with its engine revving at 3500 revs in top (fourth) gear.

The Aussie-built six-cylinder passenger car from the days before CFC-free air conditioning refrigerant (1995) is now literally hell on wheels during the summer months. Do you spend the money upgrading the air conditioning system, or just buy something more recent, built for R134a refrigerant in the first place.

And to think that the high-end prestige car from Europe is barely 10 years old, but makes do without Bluetooth audio streaming. And the CD player won't even play MP3 files from a CD-ROM disc. Quelle horreur.

If these cars are still worth anything at all in the used-car market, it's probably time to sell up and borrow or save for a new car of recent design with the desirable item of equipment you've been missing.

Parting with a car that promises to be worth more in future is a hard decision to make sometimes. Maybe you're already seeing it come up in value – and your gut tells you that it's still an appreciating asset. If you can keep it in pristine nick you stand to make a killing on it in a few years' time... perhaps.

Here's the thing though: baby boomers and the silent generation are already on the path to death's door (no use sugar-coating it). We will probably never again see the likes of a collectible car such as the legendary low-mileage GTHO Phase III Falcon.

Any money you look set to make from a collectible car may be offset by the increasing cost of servicing, parts and repairs. Consider too that the increasing reliance on electronics in cars since the 1980s could result in them being very expensive to keep on the road.

The young people of today aren't car enthusiasts as a general rule, and in the years to come – with climate change at the forefront of everyone's mind – consumers will increasingly regard the high-performance muscle cars of the past as an anti-social statement. We don't know that this is how the future will pan out, but nor can aspiring collectors afford to rule it out altogether.

There's a simple answer to the conundrum: If you truly believe the car you currently own will be worth keeping for its future investment value, take it off the road. Keep it garaged and buy something newer and cheaper for your daily drive. It will likely be far less expensive than constantly servicing and repairing the collectible car.

When you're ready to buy your new car from a dealer:

• Buy your new car just before the end of the financial year,
• Buy your new car near the end of any month, when sales staff at the dealership have to meet quotas,
• Buy your new car when the market is depressed and buyers hold the whip hand,
• Buy your new car when a vehicle has been discontinued and the dealer is clearing stock,
• Buy your new car during the previous year's plate clearance sale

Maybe your car has been stolen, or perhaps it has met its untimely end in a collision with another vehicle or the scenery.

This is indisputably the moment when you need to buy a replacement car. Hopefully the old car is insured or the replacement cost is covered by the insurer of the third-party vehicle – assuming the other driver is at fault.

The new car doesn't have to be brand new, but unless the car you're replacing was collectible, there's no point in replacing it with something older and (dare one say it) crappier.

If there is no insurer in the wings to pay for the new purchase, you probably can recover some money from selling the vehicle to wreckers, and that will partly fund the purchase of a newer car.

Some owners are told by third-party insurers that their car is no longer economically repairable after a prang. If the car had been comprehensively insured, the insurance company acquires the title to the car – your car – and sells it to wreckers to recover some costs to pay out your claim.

However, if your car is not comprehensively insured, there's no insurance contract in place that would transfer title from yourself to the other insurer. It's not unknown for cars considered uneconomic to repair (a 'write off') by third-party insurers to be repaired cheaply and placed back on the road. We have heard of one vehicle that was reborn three times this way.

Even if you can do this, economically, please don't. It's dangerous, not only to yourself, but other road users. There's a reasonable chance that the car was involved in a collision in the first place because its active-safety features don't measure up to modern standards.

If you have to rely on public transport for a few months while saving to buy a newer car, that's still a better alternative than getting around in something that has been subject to dodgy repairwork by 'a mate'.

If you still like your car – even though it's now 30 years old – and if it's not costing a small fortune to keep maintained, there's perhaps no reason to sell.

Maybe you're a mechanic yourself, or you can rely on the services of someone competent and affordable, with a dependable supply of fast-moving parts for your car.

Perhaps your car is simple and robust. If you can't locate a regulator for it, your local electrician can rewire it for an alternator with its own built-in regulator.

Is the car a daily driver? Or do you leave it in the garage and take the bus to work during the week? If you don't depend on it to take you places it's probably not going to cost a fortune to keep maintained.

And maybe in years to come your children or grandchildren could tow it out of the barn and make a quick quid on it.