If you have your eye on a new car, you might be tempted to head down to the car dealership and trade in your old vehicle, even if it isn't completely paid off. While this move may work for you in some circumstances, you also need to consider the financial impact before making a decision. Here’s what you should look for when deciding whether or not to make the trade.

3 Factors to Consider When Deciding if You Should Buy a New Car

1. Prepayment Penalties

Some car dealership loans will penalize you for paying them off early. Look up the prepayment penalties in your purchase agreement to get the details and decide whether it's worth the cost. For example, when you turn in an older vehicle and get Ford^® financing on a new car, that counts as paying off the loan.

2. Age of Your Current Vehicle

If your current vehicle is newer, it's usually not the best idea to trade it in. As the first owner of a vehicle, you paid top dollar for it, and the value dropped sharply as soon as the car was signed over to you; when you end up trading it in, you're losing money. The more often you buy and trade new vehicles, the more money you lose.

3. Your Vehicle Needs

If your needs have changed, you may not have the option to wait and pay off your old car; two car payments may be an even bigger hardship. If you need more seats for children or towing capabilities for a boat, have a look at your budget and decide whether it makes more sense to take the financial hit from prepayment penalties.

If you decide its time for a new vehicle, visit the Rokstad Ford car dealership in Ponderay, ID. Serving Bonner County, their Warranty Forever^® policy is included with all qualifying new and pre-owned vehicles. For more information about the selection at this locally owned car dealership, call (208) 263-3127, or view their inventory online.