Should I Pay Off My Car and Keep It or Upgrade?

This decision is rarely just about the monthly payment. The better question is which option gives you the lower total cost and the better fit for your budget.

Compare the full cost

Look at:

• your remaining loan balance
• expected repair costs
• insurance changes
• fuel efficiency
• the interest cost on a replacement loan

Where amortization helps

Use a loan amortization calculator to estimate the full cost of financing the replacement vehicle. Then compare that total with the likely cost of keeping your current car on the road.

When keeping the car may win

Keeping the current car often makes sense when the vehicle is reliable, your payment is almost gone, and the expected repair bill is still lower than a new loan.

When upgrading may win

Upgrading may make more sense when your current car is unreliable, unsafe, or expensive to run, and a newer vehicle would meaningfully reduce those costs.