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You are considering selling your car and replacing it with
You are considering selling your car and replacing it with a smaller, more fuel-efficient model. The new car will cost you $19,000 including all taxes. Your present car is fairly new, you bought it only six months ago, but you underestimated its operating costs. You estimate you can sell it for $14,700. This car uses 12 litres per 100 kilometres travelled whereas the new one is rated at 8 litres per 100 kilometres. The cost of insuring the new car will be $875 instead of the current $1,025, and you estimate that the cost of servicing the new car will be about $225 instead of $350 per year. You drive approximately 22,000 kilometres per year and you expect to keep the car for five years. The current price of gas is $1.50 per litre. Is it worth it for you to buy the new car? Are there any considerations other than financial ones?
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