If you’re asking yourself the question should you repair your old car or buy new, you’re probably curious to know what the experts have to say on the matter. The truth is, the answer will vary, depending upon how old your car is, what condition it’s in, how much resale value it has, and a few other factors.
Here we narrow them all down to a manageable list so that it’s easier for you to make the right decision whether to repair the old car in your driveway or go out and buy a new one.
Determine your old car’s worth. While it is generally less expensive to repair an old car than buy a new one, that’s not always the case. The first thing to do is figure out the value remaining in your old car, after you fix it, of course. To get a good idea of the value, go to sites such as NADA Guides, Edmunds and Kelley Blue Book.
Figure out replacement cost. Next, if you were going to buy a new car to replace the one you currently have, you need to sit down and figure out the cost to do that. Going for a similar make and model will likely set you back $20,000 – at the very minimum. You may also wish to use online calculators to get an idea what your monthly payment would be on that new car purchase.
How much is the repair? To really nail your analysis of the situation, you need to know the ballpark of what your old car’s repair will cost you. This entails getting estimates to do the job, and you should obtain at least two, preferably three. If you know exactly what needs repairing, you can ask for the quote online or over the phone, but you should get the estimate in writing. Parts shouldn’t vary much from one repair shop to another, but labor costs can fluctuate.
Analyzing the numbers
With the three numbers in hand – worth of your old car, cost to replace it with a new one, and how much to repair the old one – you’re ready to do the crunching. There are three potential outcomes:
- If the cost of the repair greatly exceeds your car’s current value, it’s probably best to replace it. Should you decide to replace it, the best move from a financial perspective is to go for a newer, but used vehicle. That’s so you avoid the big hit in depreciation that occurs the minute you drive a new car off the lot.
- If the repair costs are about the same as the value of your old car or less, experts advise it probably makes more sense to repair the vehicle than to buy new.
- You could decide you don’t want the hassle of your old car any longer and decide to buy brand-new anyway. This is a personal decision, but do remember that it is the most expensive outcome.
If you’re going to sell your old vehicle to a private party, you must disclose the needed repairs.
And, while a new car will set you back a tidy sum, even with the money you get from selling your old one as a down payment, new cars often have some pretty attractive incentives. These include cash back offers or low-rate financing. You might also consider leasing – but be aware of the advantages and disadvantages of going this route.