Repair Or Replace: When Should You Buy A New Car?
Have you reached that point in your time as a car owner where the turn of the key is accompanied by apprehension at the thought that maybe this is the time the engine stalls out and refuses to turn?
Has your car actually given out during an important situation, bringing forth the ire of friends and family and putting your fate in the hands of another?
If so, then it’s definitely time to do something about it. Unfortunately, it isn’t always easy to know whether that “something” is repairing the car you have or buying a different automobile.
Average Repair Costs
Nationwide Insurance recently looked at the phenomenon in depth and discovered that the average American will spend a nickel per mile on the cost of maintaining their car. Spread over 10,000 miles of ownership, that’s a total of $500, “and another $100 for tires,” the company reports.
“In addition … there’s the time commitment,” the company explains. “You have to service your car for regular maintenance, oil changes, tire rotations, as well as spend hours getting it waxed and polished to make sure its coat is clean and protected.”
In other words, plan on spending a little more than $40 per month on the upkeep of your vehicle, along with an undisclosed amount of free time. If you’re spending more than that, then it may be time to think about replacement.
But unfortunately, it’s hard to tell with any certainty when that “right time” is.
“There is no bulletproof formula to follow,” the company states, adding that “if you get hit with a $3,000 bill for a failed transmission, you could be tempted to trade it in — which would be a good decision in some cases. However, that repair would still be less expensive than a decent used car. And if you buy brand new, your insurance and registration fees may increase, while the value of the purchase immediately plunges once you drive it out of the dealership.”
The Right Answer
In order to answer the “replace or repair” question wisely, you need to develop a serious plan regarding your long-term car ownership goals. Do you plan on getting rid of the car in one year, two, or three? By the averages listed above, that would mean anywhere from $500 to $1,500 in maintenance costs.
Is your car worth that kind of money, or is it too late in the game to justify the expense?
Also, the money you save on a car payment when your car is paid for, is more than enough to cover the average cost of maintenance, provided the car doesn’t suffer from chronic problems that permanently add to the monthly expenses.
The bill to replace that transmission would be an additional $250 per month for a 365-day period, and who’s to say something else expensive wouldn’t happen soon after the repair had been made?
A Final Thing To Remember
Maintenance costs are inescapable whether you’re driving your vehicle or a new one. That $500 average will hold true regardless as will the extra $100 for tires.
However, a newer car is unlikely to bring with it costly repairs, such as that $3k tab listed above. When your car is no longer worth the price that it would take to repair it, that’s generally a sign of more repair costs to come, which can effectively eliminate your ride as a wise choice the longer you hold on to it.
What the final decision essentially boils down to is successful risk management. If you can drive your car five more years without any costly repairs, then it’s well worthwhile to keep it for the money you save in not having a car payment. But by making that decision, you’re taking a gamble the car will stay in shipshape health.