Let’s take a look at the pros and the cons if you buy a new car or fix your old car. These will go a long way to help us decide if it is time to invest in a new car or just fix up our older model.
- It’s paid off, so no monthly payments.
- This means extra money in your pocket.
- Because it’s an older car, insurance payments are lower.
- Easy to find replacement parts, and they’re less expensive.
- Recurring maintenance.
- Becoming a real money pit.
- Times it’s not reliable.
- Starting to guzzle gas.
- Probably more reliable.
- Warranty on parts and labor.
- Maintenance deals with the dealership.
- Monthly payments.
- Because it’s a new car, the insurance premiums are higher.
- It loses money the moment you drive it off the lot.
- Parts are more expensive, even with warranty for parts and labor.
Of course, everyone is different and mileage may vary, but there are some constants we’ll take a look at, and hopefully, help you decide whether it’s worth holding onto that old car a little bit longer, or if it’s time to take the plunge and start looking for a new car.
How Much Money Do you Pump Into your Vehicle?
You may not know, and that’s not necessarily a good thing. Let’s see if we can help you chart the expenses.
Granted, the price of gas has gone up, but are you having to fill the tank more often? It may be an easy fix, something as simple as a new set of spark plugs. You may also need a new air filter, or at least clean the one you have. Nevertheless, keep track of how much you’re spending in gas weekly.
Are you finding oil or coolant spots on the driveway where your car was parked? The oil could be caused by a damage oil pan or gasket. The cost of repair just depends on the severity of the damage.
But if you’re finding coolant, you could have a bigger problem. You may have a loose radiator hose, a crack in the reservoir, or the radiator is rusting out and you’re going to start seeing bigger puddles and bigger problems. If you’re losing coolant/anti-freeze, you’ll want to keep a close eye on the fluid level and top if off every time it dips below the recommended fill line.
Does your car seem to hesitate after you’ve come to a stop and you try to accelerate? Does it seem like it’s slipping gears: you step on the gas, but the engine roars before the gears catch and you move? That may be the sign of a failing transmission. Check the transmission fluid level when the engine is warm and the car is running. If it’s low, fill the tank to the fill line and see if the ride smooths out. If it continues to act up, you should get your transmission checked. A new one can be equal to a couple of monthly payments on a new car, so you have to decide if it’s worth it. If your car is nearing 200,000 miles, it probably isn’t.
What other repairs have you had to have done lately? New alternator? Fuel injector? Automatic window lift?
Keep a detailed list of the repairs (this includes how much oil, coolant, etc. as well) and cost of everything you have done to your present car for, say, three months. If the grand total at the end of those three months is more than you thought it would be, you need to start looking around for a new ride.
Even if you’re making most of the repairs yourself, your time is worth something, and do you really want to spend every other weekend working on the car?
How Much is Your Car Worth?
Check the Blue Book value, and be honest. It may be worth less — a lot less — than you think. Even so, it’s worth something if you sell it or use it as a trade-in toward a new car.
Ask yourself what your long-term goals are. Is this the car you want to keep? Can you afford to keep up the repairs? At a certain point, when enough old parts have been replaced, do you have a basically-new vehicle? One that will last you several more years?
Does the old car still suit your needs? If you’ve started a family and your car is a sub-compact, you may have outgrown it.
Can You Afford a New Car?
You may not even be able to find one. Supply-chain issues pretty much guarantee brand new cars are sold before they even reach the dealers’ lots. Used car prices are climbing because there aren’t many new cars available. Auto makers around the world are slowing — in some cases, halting — production on new cars because they’re waiting on desperately needed chips. (1)
Can You Wait Another Year?
Inflation has made this a rough time to buy a new car, and brand loyalists have had to stray outside their comfort zone. But used car prices have begun to drop, according to the Consumer Price Index. (2)
If your present car can hold out another year and you can afford the expense of repairs, you might want to start looking seriously at a new car in 2022.
But remember, maintenance on a new car — especially a foreign or luxury vehicle — can be just as pricey, if not more so, and you’ll be paying the higher insurance premiums that go along with a new set of wheels. And you may also have to spring for the premium gasoline, depending on the engine requirements.
How’s Your Credit Score?
If your credit score isn’t at least in the 700s, you could be looking at higher interest rates on a car loan, so you might want to spend the next year doing the minimum amount of repairs to keep your present car running, and start socking away all of your spare change to put toward next year’s model. Or at least a decent used car.
It wouldn’t be a bad idea to set a financial plan in place, or a budget, and do your best to stick to it. If you cut out the unnecessary expenses — $5 cup of coffee every morning, lunches out instead of brown-bagging it, cable channels you never watch, high-end electronics — you should have a pretty good start on the down payment to a new car.
But that’s something you have to decide. Hopefully, we’ve given you enough to help you decide if you should buy a new car or fix the one you have.
1. Ewing, Jack, and Neal E. Boudette. “A Tiny Part’s Big Ripple: Global Chip Shortage Hobbles the Auto Industry.” The New York Times, The New York Times, 23 Apr. 2021, https://www.nytimes.com/2021/04/23/business/auto-semiconductors-general-motors-mercedes.html.“
2. Economic News Release. “Consumer Price Index Summary.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, 13 Oct. 2021, https://www.bls.gov/news.release/cpi.nr0.htm.