The average price for a used car is up to $20,000. Yes, you could buy an older used car for a tenth of that, but is that the exit you're planning? If your current car is breaking down often, do you want to risk getting one that may need slightly less?
At some point, your obsession with your car needs a dose of reality. You definitely don't want to sink more money every month than it costs to afford a newer used car. The decision may not come easy, but this guide will help you lay out all the facts.
First, you'll need to do the math to determine when is it not worth repairing a car. After that, you'll have to weigh all the personal factors involved. Does the sentimental outweigh the financial?
On paper, that answer is “no”, but let's go through each stage of grief and do the paperwork on this decision.
What is Your Average Cost to Drive?
Do you take your car in for maintenance every month? What is the average cost to repair and maintain your vehicle? Typical maintenance and parts replacement costs each year should not exceed more than $600-1,000.
Once you start reaching $2,000+ annually on repairs, you're entering new car payment territory. A car made in the last 5 years will run you $200-300 per month, depending on the mileage, term, and your credit. That sounds like a lot, but you also need to factor in fuel savings and lower insurance.
If you're having to spend hundreds on mechanic bills each month, the price isn't right. In rare cases, you might replace a major component (alternator, power steering, etc) and your old car will run fine for another couple years. Calculate an average auto loan payment, then compare.
An Unpaid Used Car
This scenario gets a little complicated when you have a car that is still on a lease. If you're having to pay out of pocket for most repairs, you'll want to weigh your options. Yes, doing a trade-in and signing a new lease is not ideal.
The hassle and cost of maintaining a car that is constantly having problems are hard to quantify. If the car is truly a lemon, with only a few years left on payments, you might want to tough it out. Trade-in value will plummet after the dealership realizes how much work the car requires.
The best alternative, in this case, is to DIY or find someone who can do basic maintenance for cheap. If and when the car does break down, at least you're offsetting the cost of regular maintenance. You can find all the necessary maintenance instructions in your car's manual.
You can also find useful how-to instructions on YouTube. This is so you don't make any beginner's mistakes of changing the oil wrong or incorrectly seating the air filter.
How Much More Do You Need to Invest?
Although you can't predict the future on car repairs, you can try to estimate what it might cost in the near future. If you're debating on whether it's worth the upkeep of your current ride, look at where it's failing. Can you isolate your car's trouble to a single hose or part?
When is the last time you had a thorough inspection? If you can't afford comprehensive maintenance, you probably won't pass inspection. Plus, if there's a lot of maintenance needed, you're more likely to get overcharged for work.
This is the unfortunate reality for older car owners who aren't car savvy. The only thing you can do is look at the raw numbers and do your best to weigh your options.
What's Your Car's Market Value?
Before deciding to drop another couple hundred into your car, find out what your car's market value is. The general rule you want to follow is don't invest half or more your car's market value. So, if your car has at least half of your car's total value left in repairs, consider quitting while you're still ahead.
When you factor in the age of your vehicle, the choice becomes a little clearer. If you have a car that is only a few years old, you could probably toe that 50% market value. When you're talking about a car more than 10 years old, a few thousand dollars in repairs start to look a little funny.
For the newer car, even if you are putting a lot of money into repairs over the years, it's worth it for resale value. That is if:
- You're spending less than a typical car payment per month
- You're only approaching 50% market value
How Many Miles Left?
How many miles do you currently have on your car? Any car that started with a lot of miles as part of a rental fleet, for example, needs a close look. Yes, they get more regular tune-ups than your average private owner.
It still matters a lot whether we're talking a Nissan Altima with 70k miles or a Honda Civic with 120k miles. The former in this example has fewer miles, but a long history of transmission issues, while the latter is known for reliability. Will that next repair extend your mileage significantly?
While we're on the topic, look out for car models that have open recalls. The mechanic won't always know all the recalls in the past and still ongoing. If your vehicle has a recall you didn't know about, you could get all your repairs done for free. The dealership will have to address the parts recalled and any other parts that may have been affected.
When is it Not Worth Repairing a Car?
Obviously, there are no ensures that another (more up to date) vehicle won't stall or have maintenance costs. Chances are it won't approach your current rate or repair. You do need to consider a portion of those hidden expenses and advantages that accompany owning a brand-new vehicle.
For instance, you may get a guarantee that will cover early fixes, and all you need to stress over is basic support. In a perfect world, you'll forgo the dedicated mechanic that accompanies high-mileage autos. Newer cars are more reliable, efficient, and emit less pollution.
You shouldn't overlook the advantage of having a newer car with better safety. That's one of the big signs that your car is ready for retirement.
The normal age of a vehicle in the United States is more than 10 years old now. That's higher than ever before, and with the correct consideration and upkeep, yours can last 10 years too. People are realizing that buying a new car every five years is no longer necessary.
Car technology has reached a plateau of sorts. The biggest upgrade you can make in the future will be going completely electric. Right now, electric and hybrid vehicles are still a big premium.
If you can get a car that will last you into the next decade, you're in good shape. The question then becomes: do you wait a few more years or do you make that switch today?
Is It in Your Budget?
Can you afford car payments right now? Can you afford not to switch to a new car with payments? Keep things realistic, give yourself a budget for how much you can afford per month without sacrificing comfort.
After you land on a number, take a look at used car listings and what is in your range. Make sure you're including the cost of full-coverage insurance, as most dealerships will require it. Does that number still fit your budget?
If the answer is “yes”, then you should consider junking or trading in your old car and giving yourself a break. The struggle of having to take care of an aging car might trump however much your car budget will increase. You should also consider the advantage of selling your car now before an unexpected breakdown.
You can't predict when or if this will happen, but if it does, your car's value plummets.
Say Hello, Wave Goodbye
When is it not worth repairing a car? When you've lost that spark and your car is no longer good for your health. Driving is already a stressful experience on its own.
Driving an old car that is constantly failing on you or runs very rough is not fun. Start looking into ways to get the most you can for your aging car. At Cash Cars Buyer, we can help you plan your exit.
Get the most for your car by calling us to see how much your car is worth now. Remember, the Kelly Blue Book value is under ideal conditions. If your car is currently inoperable, you need someone who will give you a fair price for it.
Sell your car fast and at a fair price today.