Is your car worth saving?

How do you know when to put big dollars behind a repair ... and when it's time to buy a new(er) car? Here are 9 questions to ask yourself.

By Smart Spending Editor May 14, 2013 7:39PM
This post is by Gary Foreman from partner site U.S. News & World Report.

MSN Money Partner SiteThe average age of a car in America reached an all-time high this year of 10.8 years, according to a study by Polk, an automotive information and marketing firm. That means a lot of us will be facing needed repairs.

Money (© Creatas/PictureQuest)When that happens, some of us will be tempted to decide our car is not worth repairing and we should find a new ride. But is that true?

Let's look at these questions to ask yourself before you decide whether your car is worth keeping:

1. What does the research show?
Many times you can diagnose a car problem online. Knowing what caused a leak or squeal without having to consult a mechanic can save money and give you a good idea of how much it will cost to fix.

2. How much will the repair really cost?
Don't go on a gut feeling — either take your vehicle to a mechanic or call and describe the symptoms and ask for a high/low range for cost to repair.

3. How long will the repair extend the life of your vehicle?
If one repair will add years to your car's life, it may make sense to do it. On the other hand, if this repair is just one of many you predict to come, it probably makes more sense to trade in your vehicle and purchase a new one.

4. What is your car worth if it's repaired?
Kelley Blue Book can provide a rough estimate of your car’s worth, based on figures such as mileage.

5. What is your car worth if it's not repaired?
You may have an opportunity to sell your car to someone who can do the repair for less than you'd spend—or you may have to sell it for scrap value. In any case, find out what it's worth as-is.

6. Have you replaced other major components?
If you've recently repaired a major part (e.g., the transmission), that's one less major bill in the near future. It could be that the major components are newer — and more reliable — than your car's age.



7. How important is a dependable vehicle? Your job or family situation may require a reliable car, or you may be more flexible to deal with a stubborn vehicle.

8. What would your new car payments be? That new ride could cost you $300 or more per month for the next three, four or five years. If you're struggling to pay for the repair, how will you make the monthly payments?

Smart Spending on the go: Get our app for Android or iPhone


9. Will the repair cost more than the car is worth? In most cases, it doesn't make sense to spend $3,000 to repair a car with a book value of $2,000.

Only after considering these questions should you decide to invest big bucks in an auto repair or decide to swap it for a newer ride.

More from U.S. News & World Report:


VIDEO ON MSN MONEY

11Comments
May 15, 2013 2:25PM
avatar
The advice to not spend more on repairs than the car is worth is ridiculous. That's like saying don't spend more on gas than the car is worth. If you get a new Honda Civic for, let's say, $17000, and you spend on average about $200/mo, you blow past the car price in 85 months (7yrs and 1 month). Do you then sell the car because buying gas for it is "no longer economical"? No!

Same thing with repairs. If you have a reliable car and have been taking care of it, then it's almost like a new car for you. You have trust in it to drive it where ever you need, even if it is over 10yrs old. My car is 15 yrs old and I bought it new and have maintained it very well with reasonable cost. If I need to repair it I look at the repair cost vs. the cost of a new car. The repair cost is always lower so I go with the repairs. I'm sure I'll reach some time where repairs won't make sense but that's still years away, maybe even another decade away! When that time comes, I'll get that new car. Until then I'll keep repairing my trustworthy old car.
May 15, 2013 3:51PM
avatar
It's probably a better idea to consider the 'cost of transportation', rather than the market value of cars.  Basically, all cars are a waste of money.  If you want to be financially successful, the game is to minimize your transportation costs.

To put it simply, older cars waste money on repairs, new cars waste money on depreciation (and higher insurance and registration tax costs).  Either way you're taking a hit.

The real question is this:  Are the costs to repair my old car higher or lower than the depreciation on a new car?  I wouldn't be too concerned with the market value.
May 16, 2013 4:13PM
avatar
Avoid paying $500 once for a repair by paying $600/mo for 36mo for a new car.... Go America!!!!
May 15, 2013 3:26PM
avatar
This is the Internet Age: Kelly Blue book is a dinosaur.  To know what your car is worth, go online to various sale sites and find out.  Ebay, Craigslist, Autotrader, and many others will give a figure that may be different than blue book, and what the comps say are what your car is actually worth if you are going to sell it.

If you want to settle for a trade, the best thing to do if you know your car will die next week, then, and only then, should you settle for blue book.

May 16, 2013 1:08PM
avatar
I just know I won't pay $10,000 for ANY used vehicle with 125,000 miles on the odometer.  That is foolish. 
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.