You’re having car trouble again for the third or fourth time this year. The cost of repairs are becoming burdensome as their frequency increases, so you start to wonder: should I repair my car again, or is it time for a replacement? This can be a complicated decision based on your individual situation. Let’s look at the biggest factors to consider when choosing between repairs and replacement.
The Cost of Repairs
The first thing to do when considering the cost of your current car is to calculate the fixed costs, including registration, insurance, fuel costs, and maintenance. After adding this up, take a look at your repair costs over the past year. Have you spent more than $1,500 on repairs in the past 12 months? Do you expect this to continue in the coming years? If so, the cost of your car has increased by over $200 a month due to its age. That’s quite a bit of money to spend on repairs, but even still it may be cheaper than buying a new car that will come with a note exceeding $300 per month.
The Worth of Your Current Car
Visit one of the several websites online that can give you an estimate of what your car is worth. The value of your car will vary depending on your decision to sell outright or trade in.
A typical mid-sized sedan from Dodge or Chevrolet, with 150,000 miles and no obtuse damages, will often receive a credit from a dealership for somewhere between $1,500 and $2,000. You could also go through the extra effort of selling the car yourself and receive up to an additional $1,000. This would also be in cash rather than credit. If you have the time, consider selling your car outright.
Weigh the Difference
After you’ve calculated the cost of maintaining your current vehicle, compare it to the estimated worth. If your cost is higher than what the car is worth, it is likely a good time to search for a replacement vehicle. Pouring money into a vehicle that isn’t worth its cost is a poor investment.
Your Financial Picture
Most car loans are designed to last five years. Lenders will review your credit history at the time you decide to purchase a vehicle. Ensuring that you have a favorable credit score can save you thousands over the course of five years.
One important thing that many forget to consider is the money lost while cars are being worked on in the shop. Are car repairs forcing you to lose time at work or spend extra money on transportation services? These costs can add up, and should be accounted for.
Fixed Cost Changes
With a new car, your fixed costs are going to fluctuate, and this is important to consider when budgeting for the future. The fuel efficiency of most cars has improved drastically over the past ten years. Look into the fuel efficiency of cars you are interested in to see if you’ll be able to save money on gas with the new car. Also, contact your insurance provider to see how much they typically charge to insure models you are looking at. A new model may mean a change in insurance premiums.