New car or repair old car?
Question: My husband is a Realtor and with the slow housing market, we’ve used up all of our savings. Our 8-year-old, paid-for mini van needed $1,500 worth of repairs two months ago. Now, at the tail end of summer, the air conditioning stopped working. We need a new compressor and probably a new timing belt, too, an estimated cost of another $1,500. Should we just throw in the towel on this car and get a new one?
Answer: Our answer may not be what you want to hear but it is pretty simple: No.
With no money in savings, there isn’t enough money to pay cash for a replacement car. And with “iffy” household income, taking on more debt, especially in this economy, is not good. The cheapest car to drive is the one you have. Save up the money and get it fixed. There are reputable mechanics out there, get a couple of recommendations from friends and get several quotes. Also check out mechanic and radio host Mark Salem’s web site, BestCarRepairShops.com (Arizona Only), for his picks.
Years ago, Consumer Reports did a survey of original car owners who drove their cars to 100,000 miles and more. They found that the most expensive year of car ownership, on average, was the seventh or eighth year. Remember, cars are expensive. After you get it fixed, you’ll feel better about keeping your car. Then you should start putting money aside for regular maintenance. We expect to spend $1,500 to $2,000 per year per car for maintenance and repair. If you save the repair money and don’t need to spend it, you can use that money toward your next car purchase, which hopefully you will do with cash. Living life without a car payment isn’t impossible, it is the “American Dream."
Read our book - Chapter Four is dedicated to saving money on cars. The bottom line is cars are expensive and we need to do all we can to be smart drivers.
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