When is the best time to buy or replace your car financially?

It's something everyone dreads.

One minute you're cruising along without a care in the world, the next your car is stalling and sputtering. Then you're on the phone to roadside assist (again!) before, inevitably, you find yourself shelling out even more cash (again!) just to get your car back on the road.

If you find yourself spending more and more time waiting for tow-trucks, it can be tempting to throw in the towel and spring for a new ride altogether.

Here are just a few situations where it might be worth doing the unthinkable... consigning your old faithful to the great junkyard in the sky.

It’s burning up all your time – and mental energy

If your car constantly breaks down, it can become as much of a psychological burden as a mechanical and financial one.

You've got to get your car to the mechanic, make alternative arrangements while it's being repaired, then find time to come and collect it. You might be taking hours off work every time, splashing out on Ubers and taxis, and after a while all these costs make your car more and more expensive.

All the while driving you precisely nowhere… except crazy.

The ongoing costs are out of whack

Constantly repairing a car can be expensive – but a new one isn't exactly cheap, either. When you're weighing up your options it's worth sitting down and crunching the numbers.

First, consider your fixed costs and then add the amount that you've invested in repairs up until this point. That will give you a rough framework you can use to work out how much you're coughing up per month for your ride.

Remember, even if you factor in future repairs, this monthly cost is likely to be lower than the repayments on a new car. On top of this, remember you're still going to have to pay ongoing costs to run a new vehicle – including insurance, registration, petrol, and tolls. There's no point springing for a new ride if you don't budget enough to be able to keep it on the road.

Also, it's worth noting that maintenance costs are inevitable with any car – even a new one. Electronics fail, parts wear out, tyres need to be replaced. If you're financially astute (and if you're reading this, you probably are) you can budget for those repairs, so you're not caught short if things go wrong.

You’ve come up with a financially smart way to buy a new one

Maybe you've done the maths and decided you'd prefer to take the plunge and commit to a new car. Congratulations! Now, how can you make this work for you financially?

Perhaps one of the biggest decisions you'll need to make is whether you want a new car or a used car that's new to you. A vehicle from a dealer can certainly be appealing, as you'll have the peace of mind that comes with a new product, backed up with a manufacturer warranty if you're unlucky enough that something does go pear-shaped.

Having said that, a new car comes with its own set of drawbacks and chief among them is depreciation. The average new car's trade-in value drops 33 per cent after one year on the road, and a staggering 52 per cent after three years – eek.

Buying used means you can potentially take advantage of this depreciation and pick up a new-ish car for a good price, while still benefiting from a reliable ride and modern safety features.

Finally, consider whether your current car has any trade-in value (even in a run-down state). If you sell it privately, are you going to be able to recoup any of the costs that you will be outlaying on a new car?

You’re ready to give the new car some serious love

A modern car can last well over a decade with proper maintenance, so once you do take the plunge and buy yourself a new car, put in the time and effort to look after it the way it deserves. Keep up with scheduled services, find a mechanic you trust, use premium petrol and drive it gently (that means avoiding sudden starts and stops where possible.)

Need some extra cash? Take a look at Latitude car loans to get started.