I just went through something similar to this, instead of taking an incremental upgrade of 1 year I was thinking of trading in a 2008 for a 2014. Decided against it, the car I had only had 85K on it, and after a going-over by some mechanics I trust and shelling out for some tuneups (fuel system clean which didn't do shit for fuel economy, new plugs, new stereo w/Bluetooth, stuff for interior), I'm happy to hold onto it for a while longer. If you're that on the fence about this, then figure out what your monthly payment is going to be for the loan you're taking out and start paying yourself that plus 100 (for insurance overhead) into a separate account. If you so much as consider stealing from that for non-car expenses, you're not ready to buy a car. If your existing car has some repair issues a year from now that you can easily cover with that account, then do so. If it's a catastrophic failure, then use the account for a downpayment on a new/used one.