Perhaps this scenario is familiar to you. Your car broke down and now you’re faced with a costly repair bill. It may not have been the first time this has happened, and you’re getting tired of pouring money into an aging machine. A new car would be nice, but is that the smartest decision in today’s inflated market?
As new and used vehicle transaction prices continue to hit record highs, many owners are asking themselves: “Should I fix my car or trade it in for a new one?”
The average 12-month repair and maintenance cost for a 5-year-old vehicle is $205 and increases to $430 for a 10-year-old vehicle, a 2020 survey from Consumer Reports finds.
But if you’re one of the unlucky ones who had a catalytic converter go bad or get stolen, it cost an average of $1,383 to repair, a 2021 report from CarMD finds. It might not seem like much, but there’s no guarantee that another issue won’t rear its head in the future.
The answer will differ for everyone based on the repair costs, age of the vehicle, comfort level with driving an older vehicle and more. With these things in mind, here are some pros and cons for each option to help you make a more informed decision.
Arguments for fixing
If buying a new car doesn’t fit your budget right now, or you prefer to let the market cool off, it might be a good idea to fix your car to get a bit more life out of it and avoid making a hasty car purchase.
Generally speaking, it is almost always less expensive to repair a car than buy a new one. Even something as severe as an engine or transmission rebuild will cost you roughly $1,200 to $5,000. Such repairs still don’t cost as much as buying a new car.
And while $3,000- $5,000 would make a nice down payment, you’d still need to consider the monthly payment, which is $637 on the average new car with a 70-month loan, the latest Edmunds data shows.
Used cars might not be much relief either, as the average payment hit a record $535 in late February. On a new car, insurance and registration fees will be higher than for your current vehicle, so you’ll need to plan for that, as well.
Arguments for buying
Old cars can be unpredictable. If you’re tired of the constant visits to the repair shop and the maintenance costs are getting out of hand, it may be time to buy a new one. Similarly, if the car leaves you stranded often, causing you to be late for work or putting you or your family in a potentially dangerous situation, the new car can bring you much-needed peace of mind.
You won’t have to worry about paying for repairs for the duration of the new car warranty, roughly three years or so. And major repairs are not likely to occur for a few years past that. Even opting for a more reliable used car, such as a certified preowned vehicle, can be enough to calm those nerves.
Finally, the new car will also be much safer, both in terms of its rigidity, crumple zones and modern safety equipment. Features such as automatic emergency braking, backup cameras and blind-spot monitoring are increasingly becoming standard on new vehicles.
Extend your car’s life
If you are not yet faced with making the tough decision to fix up or trade in your vehicle, there are a few steps you can take to prevent or avoid costly repairs.
Get your new car maintained at its proper intervals to avoid problems and breakdowns. Use your owner’s manual to learn the recommended service intervals for your vehicle.
Maintaining a much older car means paying close attention to items that commonly break down. We recommend finding a good, reliable local mechanic as a less expensive alternative to a dealership service department.
If you’re experiencing issues with your car and don’t know whether things are likely to get worse, look for advice on message boards and forums for the make and model of your car. Other people have probably been down this road before you. You can get a preview from them of the problems associated with your vehicle as it ages.
Edmunds says
Buying a new car might seem like the easy way out of a high repair bill, but depending on your circumstances, it might not be the best financial decision.
On the other hand, if the fear of being left stranded keeps you awake at night, it is better to part ways on your terms rather than waiting for it to break down at an inopportune time.
Ronald Montoya is a senior consumer advice editor at Edmunds. Follow Ron on Twitter (@Ronald_Montoya8).