There are many advantages of owning an older vehicle – cheaper insurance, low monthly payments or owning the vehicle outright, and now vehicles are built to last upwards of 200,000 miles.
When do the costs outweigh the benefits of an old vehicle though? Vehicles are expensive and are an important financial investment. Consider these five questions when deciding if it’s time to trade up or repair your older vehicle.
How much money are you putting into repairs? Is the repair less than a few months’ car payments on a new vehicle? Get a couple quotes on the cost of the repair. Determine if this is a repair you could do yourself to lessen the cost. If the cost of the repair is more than a few months’ car payment, it may be wise to consider purchasing a new vehicle.
How much is your vehicle worth? If your older vehicle is repaired, what is its value and what if it isn’t repaired? If the repair costs more than the vehicle’s market value, put another check in the ‘Upgrade to a New Vehicle’ column.
How long will the repair add to the life of your vehicle? If the repair is just one of many you expect in the next few months, consider how much all of those repairs will cost. If this is a one-time repair that will add years to your vehicle’s life, the repair may make more sense.
What is your budget? How much would your new auto loan payments be? If a new vehicle costs you $300 or more per month for the next four or five years; and over time that payment puts stress on your budget, you may be better off making the one-time auto repair.
It’s not just numbers. Numbers and calculations are important but you should also factor in peace of mind. How important is it to have a dependable car? How much time will your vehicle be in the shop for repairs and what is that time worth to you? Is your life situation about to change? If you’re planning on having children within the next year, it may not make sense to keep repairing your older two-door hatchback.
Make a smart financial decision. Consider all these questions before you decide to invest in an auto repair. Whether you decide to move forward with the repair or upgrade to a new vehicle, you’ll feel more confident in your decision.