The new car decision has a lot of factors to consider. The car you keep will continue to depreciate, which is part of why the insurance gets cheaper. The price of a new car will go up, although right now manufacturers aren't able to raise prices as much as they would like. The old car starts to need maintenance - tires and mechanical things. If you are only keeping it a couple years you can pay out a sizeable sum to keep it safe and reliable. If you're keeping it several years the maintenance is likely to pay off for you. I wrestle with this every four years because being a car guy from the 50's I love getting a new car when the old one gets around 50K miles. Yeah, it's emotional but I get that itch every 4 years. I pay cash so no finance charges and in today's markets keeping the money in savings doesn't make me anything. Still, if my investments aren't doing better by late 2013 I may end up holding onto the old beast a couple more years. I may be vehiclely emotional but I have a fiscally prudent side too. Never sure which side will win until I negotiate with my friendly auto dealer.