You often hear “it’s going to cost more to fix than it’s worth” given as a reason for buying a replacement car. And it’s easy to think that way.
We have been conditioned as a society to believe that new is better, and that old is unreliable or even dangerous. We’re also used to viewing spreading costs out over time as a good thing, while immediate expenses are painful.
But the reality is that how much your car is worth doesn’t matter at all, unless it’s being totaled by your insurance company or you’re trying to sell it. So it’s sort of silly to use your car’s value as the deciding factor in whether or not to repair it.
For instance, I once replaced the engine in my car, which cost about $3200 to do. At the time, my car was probably worth $3000. Why didn’t I just get a new car instead of replacing something really major like the engine?
Well, paying the $3200 was a whole lot less than paying $28,000, which is what a new car of the same model would have cost me. Why would I spend an additional $24,800, plus interest, plus higher insurance costs, to avoid spending $3200? I also could have gotten a replacement car that was the same year as mine for about $3000, but why not just get the new engine (and improve my existing car’s likely lifespan) if I was going to do that?
Now if I had to do enormous repairs like that on my car every single month, the situation would be different. Then it would make sense to get a different car. But my car’s worth would have nothing to do with it — what matters is how much I’m actually spending over the year.