All frugal drivers have reached this unenviable point.
Old Faithful, the automobile you have babied and maintained past 100,000 miles, now requires expensive repairs.
Is it worth it to funnel more money into your aging ride, or is it time to start over with a new car? This is a difficult decision to make, as it can be hard to know if this expensive repair is just the tip of the iceberg of mechanical problems, or if it will get you cheerfully back on the road for several years to come.
To make this decision, there are several questions you should ask yourself:
How Safe and Reliable is the Car?
If you are putting good money into repairing an older car (older than the early to mid 90s), you might want to think about re-channeling money into a newer vehicle. Safety standards have come a long way in the last 20 years, and it really is important to keep up with them, particularly if this is your family car.
Even if the safety standards are up to par, reliability can also be an issue in older cars. If it’s in the shop more often than it’s in your driveway, it might be time to either find a new car or a new mechanic—even if each fix isn’t that expensive.
How Much will this Repair Cost?
Before you agree to any work done on your car, get an estimate in writing. That will help you decide several things—how you will pay for the repair, how much more time you will need to drive the car to make the repair worthwhile, and how much car that same repair money would be able to buy if you instead decide to start over with a new car.
How Much is the Car Worth?
This part of the equation is not nearly as simple as it sounds. For auto insurance companies, it’s straightforward subtraction: the car’s value minus the cost of repairs. If that number is 0 or negative, they total the car.
For the rest of us, however, the car’s value also encompasses the idea of what it is worth to you to be free of a car payment, to not have to take public transportation to work, and how much you love the car. (Don’t laugh! I have known many responsible adults, myself included, who were head-over-heels in love with their cars.)
The car’s value is a highly subjective measurement when it includes these metrics, so it is important to sit down and decide ahead of time how much you can afford to put into repairs.
How Long Can You Reasonably Assume the Car will Last?
Thanks to the internet, this is an easier question to answer, as you can do a great deal of research on when your make, model and year of car becomes onerous to own. If you’ve got a repair estimate in hand and can’t decide, do some research on the car and the repair.
Chances are, someone out there has encountered a similar problem with the same car and can give you an idea of how much more drive time this repair will buy you. A good rule of thumb is to only spend about $1000 per year of further service. That will certainly cost you less per month than a new car payment.
Unfortunately, with these sorts of money decisions, you will never know for certain that you’re making the right choice. The best you can do is to gather all the information you can to make a good decision, and to be proactive in saving for repairs or a new car as your trusty automobile ages.
What’s your breaking point? How do you decide to repair or replace your car?