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When to replace a car

When to replace a car

Cars are mechanical things, and like all mechanical things, eventually they need repairs and/or replacement. But how do you know when to replace a car? I’ve known people who replaced their car every time they got it paid off. Some people replace their car whenever they get tired of it. Still others replace their car every time it hits an arbitrary mileage mark or age. But if you want to save money and get as much value from your car as possible, you should approach things differently.

One method involves replacing your car at the point where the cost to maintain or repair it is greater than the car’s value. Using this method, if your car was worth $3000, you would replace it if it needed a new engine. If your car was worth $500, you might replace it if the door became dented and the bodywork would be over $500. This method ignores the possibility though that with a new $3000 engine, you might get 10 more years of use out of the car with only the expenses of regular maintenance.

Another method involves waiting until the point where the cost to maintain/repair is greater than the amount you would spend on a replacement car (in car payments, maintenance, and extra insurance). For example, right now I spend an average of $220 per month on my car (including gas, repairs, maintenance, and insurance). Of course, I don’t spend that amount every month — it’s just the average over several years, and it also included an expensive new paint job. Most months I just pay for gas. A one-year-old car of the same model as my current (17 year old) car would run me about $18,000 for the initial purchase. To get a very rough idea of the total cost to own a replacement car for 5 years, I used Edmund’s true cost to own information for a 2006 model, which gave me $38,513. That amount divided by 60 is $641.88, which means that my spending would need to approach $641 per month on my current car to make trading it in worthwhile.

In the end, replacing a car is a personal choice. I hope to get many, many more years out of my current car because I thoroughly enjoy both driving it and not having a car payment. If your car is unsafe to drive, that is different matter, but don’t let the shock of a large repair bill goad you into replacing a car that may have a huge number of years left in it if you don’t want to replace it. Sometimes it’s less expensive in the long run to just pay the repair bill.

View Comments (2)
  • Wow, you’re the first person I’ve heard of to have a philosophy that means having a car longer than I would. We actually have about the same philosophy (when all the required repairs add up to the price of a new car, that’s when I get a new car), but my idea of a “new” car costs only $3000 – 5000 (I buy ten-year-old cars).

    I wonder how long a car lasts before it starts costing $641 per month. (Well, some cars are expensive, but yours must be fairly reliable with fairly reasonably priced parts.) My sixteen-year-old car costs me $150 per month to maintain (gas, insurance, maintenance and repairs). (My last car was only costing me $100 per month until the accident. It lived twenty years.)

    With your philosophy, you might get into issues with part availability.

  • I have been operating a much older vehicle for a long time now and one difficulty with applying a straight cost estimate to the car is that I don’t make most repairs on the car – because “needed” is a relative thing, and because of part availability. The dents don’t make the car unusable, just less so; the paint is deteriorating but there is no special reason it needs new paint, the A/C doesn’t work but that is usually not a problem where I live. So when I am considering a new(er) car, I am also considering that as a way of getting many of these little problems fixed that aren’t possible (because of parts) or I haven’t felt are worth it on my older one. There also seems to be a lifetime to most car parts; after a while they break, and the older the car, the more likely parts are going to expire on you and simultaneously be hard to find or more expensive. So I have felt in one case that I needed to get rid of a car even though the cost to fix it was less than the car’s value because of all the little stuff I wasn’t fixing and the trend I saw of increasingly more frequent and more expensive repairs.

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