We answered another question on Quora.com this month, and thought many of our clients may be interested as well. Emirey J. asked “Is there any rule of thumb to decide whether to repair an old car or get a new car?” This is one of the most common questions we hear, and as we told her, there’s no right or wrong answer. It all depends on your plans for the vehicle, your budget, and the repairs on the horizon. There’s no simple answer, but there are hints…
There are two broad options for sensible vehicle ownership: either keep it maintained and drive it until the wheels fall off, or do minimal maintenance and trade in for a newer vehicle every few years. Both have pros and cons, but “when is it time to give up?” is one of the most difficult questions we solve with our clients because each person’s expectations for their vehicles are so different. There’s no single right-or-wrong answer, but you should be aware in talking with your mechanic that they often approach the question a little differently than you would.
Vehicles (much like humans) tend to gobble up the most repair money in the last months of their lives as system after system reaches the end of its planned design life. When Tom started as a mechanic in the seventies he was told ‘no vehicle is ever beyond repair’, which is true from a shop’s viewpoint. Virtually all auto repair shops these days are commission-based and they often see older vehicles as cash cows. The longer they can be kept limping along, the longer the owners will pump money into the shop coffers. This is rarely in the vehicle owners’ interest, so in most cases you’ll be the best judge of when the plug needs to be pulled. Be wary.
Chances are you have a repair estimate that prompted the “should I give up” question, but that’s probably not all the repairs you face. Start by finding a qualified mechanic or shop you trust to go over the ENTIRE vehicle and tell you what’s likely to fail soon. We offer an in-depth Comprehensive Inspection to do exactly that, but not all shops do. However, almost all offer a “free inspection” of some type that might find obvious problems. Get that if it’s the best you can find, but tell the shop what you’re looking for from the inspection and tell them to go as deep as they can. Most cities have mobile inspection companies that check out used cars for purchase; one of those could be a very helpful alternative.
Next, determine the value of your vehicle using resources like Kelly Blue Book. You’ll find a price, but your vehicle’s VALUE is that number MINUS the repair cost of current breakdowns, MINUS any repairs you see on the horizon. (You might not do ALL those repairs if you’re planning to sell the vehicle, but you should definitely include safety-related items like brakes.)
Now you have your choices… fix it, or sell it and use the money (plus whatever money you saved on repairs) as a downpayment on a different vehicle.
By itself, a big repair bill isn’t necessarily a deal-breaker. Suppose, for example, your vehicle is worth $5000 but it will cost $2500 to fix its dead transmission. $2500 is a big bill by any standard, but what kind of vehicle will you have when the repairs are finished? If it’s a good, solid vehicle (like a Toyota or Honda) with few other issues, then it seems wise to do the repair because you’d have a reliable vehicle afterwards. Even if the vehicle has a shorter design life (like a VW or Hyundai) but still has few other issues, it might still make sense to do the repair. But if other major systems about to fail, if that big bill is just the start of what you’re facing, then it probably makes sense to move on to a different vehicle.
When should you give up on a car? The decision is totally up to you, your expectations of your vehicle, and your budget. I hope this has given you some good general advice, but if you REALLY want specifics we found an article in Motor Magazine that offers extremely detailed math on the question. It’s more complex than most people want, but probably very useful if you want to dig deeper. Good luck!
