Your Aging Car: Repair or Replace?

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:

Do you have an old car constantly in need of repair? Do you wonder if you should use that money to buy a newer, better car? Read this post to find out all the factors involved. There are a few important things to consider before you decide to repair or replace your old car.

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.

Alternative: Dump the Car Payment and Rent Instead

We do it with our housing. Why not transportation?

Have you considered renting a car occasionally instead of buying?

This is what Tomi Grover does.

I met Tomi at an online entrepreneur’s networking function last weekend. She confidently told a group of us that she doesn’t own a car. Instead, she rents a car only when she needs it.

Knowing Tomi lived in the sprawling suburbs of the Dallas / Fort Worth Metroplex, where everyone needs a car, I thought this was impressive.

We’ve all heard of people near urban centers making use of car share/rental services like ZipCar and Car2Go. But those services have yet to reach the burbs.

Saying Goodbye to Car Payments…the Hard Way

Tomi’s relationship with cars hasn’t always been so functional. She calls herself a “car enthusiast”. She grew up in a family that only drove new cars.

She says her father smoked cigarettes, and as soon as “the ashtray got full” he would trade in the car for a new one.

Fast forward a few years, and Tomi’s love affair with cars had fixed itself on an Acura TL with leather interior. It would be her last car though.

A major medical issue left her unable to pursue her entrepreneurial dreams, and thus, unable to make her car payments. She gave up her car and even chose to cash out some of her retirement to pay for some of the medical debt.

Since that time, Tomi has recovered and continued to pursue her entrepreneurial, mission-minded dreams.

But she hasn’t returned to the world of car payments.

Fortunately, Tomi’s husband, who works in law enforcement, was able to purchase a truck. Tomi is able to use the truck when her husband isn’t working one of his two jobs. She also occasionally borrows a vehicle from her children.

This approach isn’t for everyone. Like me, Tomi mostly works from home. She’s an author, speaker, teacher, and info-preneur on the issue of human trafficking. Her work requires that she travel away from her home a few times a month to mostly regional locations. It’s obviously more difficult to borrow a car for these trips.

Renting Occasionally vs Buying a Car Outright

Instead of buying a car, which would come with insurance and maintenance costs – not to mention a car loan or large cash outlay – Tomi has decided to rent.

Tomi rents mostly from Enterprise, who has a location just two miles from her home. Enterprise will “pick you up”, which in Tomi’s case, gives them a leg up on the competition.

Many people are taking Enterprise up on this offer. I spoke with a representative and they said roughly half of the customers who rent from their “neighborhood” rental locations use the “pick me up” service.

Enterprise also has weekend rates as low as $9.99 per day. This is limited to 100 miles per day, but Tomi says this is often more than enough for her weekend speaking gigs.

Joining the Enterprise rewards program, Enterprise Plus, has also been a good way to lower rental prices and occasionally qualify for free rentals and upgrades, says Tomi.

I’m certainly inspired by Tomi’s story. It made me reflect on my own situation.

What’s your breaking point? How do you decide to repair or replace your car?

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon.

He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence.

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  1. Jenna, Adaptu Community Manager says

    I just spent $1,500 earlier this year repairing my car. I think that will be the last major repairs I will do on this car. If something comes up I believe I’ll get a new car in the next 5-10 years.

  2. Emily Guy Birken says

    @JR, you’re absolutely right about 100k miles being doable these days. A friend was asking my husband (an automotive engineer) for advice about buying a commuter car, since she didn’t know how she could get a decent used car with low mileage for the amount of money she had to spend. My husband told her that he’d rather buy a car that was over 100,000 miles that had been well taken care of than buy a car with low mileage that had not been maintained.

    For me, I always think about the classic cars in Cuba and how they’re kept running year after year. It would be great if more of us knew how to fix things ourselves so we could keep cars going and going.

  3. I don’t think that 100,000 miles is really as big of a problem anymore. It all depends on what type of car you have and how you drive but most reliable brands/models will sail over 100k with no problems. Even after that point the repairs are not really that much compared to the cost of a newer vehicle. Recently for example we had the timing belt and water pump replaced on my wife’s car and the total cost was a measly $500.

  4. I repair it,i if I think I can get more than X months from the repair. X being the repair divided by $100. Just my little rule. It seems to work for me.

    • Philip Taylor says

      That’s a nice rule of thumb, Ginger. So, in the example in the comment just above yours, the $2,000 repair would need to get 20 months to be worth it. Therefore, at 18 months, that repair has almost reached break-even. Nice way to think about it.

  5. cashflowmantra says

    That can be a tough decision at times. I don’t have a really good plan for doing so other than if I think the problem is isolated, I will go ahead and repair it. I had my transmission rebuilt for $2,000 in my mini-van. That was 18 months and 50,000 miles ago, so it turned out to be a good decision.

  6. We just went through this process. We had an old vehicle that needed repairs. We just put $1500 repair into the vehicle because we hoped it would extend the life of the vehicle. Not long after repairs were done, we discovered the vehicle would need about $1200 more in repairs. We were balancing what the smartest, best financial decision was. In the end, we decided to go with the vehicle. The old vehicle wasn’t worth the price to keep repairing. We considered the fact that it wouldn’t last us very much longer, even with repairs. Also, interest rates are very good right now in our area and other parts of the country so it was a combination of things. Even though we didn’t plan on a new vehicle now, it ended up being the right choice.

    • Agh, that’s a tough one to swallow. I probably would have doubled down on the old car as I’m a glutton for punishment. Rates (especially at credit unions) are very tempting these days.

  7. earthling says

    also factor in sales tax, depreciation (and if financed, interest) plus any increase in registration and insurance for the replacement vehicle.

    you’re going to replace the vehicle in any event … either all at once as in replace or piecewise as in repair. the primary factors for me are whether the vehicle is servicable and whether its repair frequency interferes with my ability to earn income.

    • Great additional factors to consider. And nice point about loss of income. We only have so many days off to have repairs done.