So, what’s the “sweet spot” for buying a new car or keeping the old one?
I have a 2001 Nissan Xterra that’s in okay condition (paid off, of course), but needs about $1500+ worth of work (A/C compressor, radiator leak, brakes, struts, tires, etc – she is functioning okay now, but it’s only a matter of time before the big bill is coming). She’s been a great car and I love her, but over the last 18 months I’ve sunk about $1,800 into her (plus the upcoming anticipated costs).
She has 129,000 miles on the odometer, but 80,000 of these miles are on a new long-block engine that was installed (free) by Nissan about eight years ago when a dealership mechanic dropped a wrench in the pistons and ruined the engine.
Plan One is to drive her until the wheels fall off – figuratively speaking – then sell her really cheap to a shade-tree mechanic or give to a friend who wants to sink some money into her.
Plan Two is to sell or trade her in for around $3-4k and put it toward a new car with a warranty.
In your opinion, what’s the “sweet spot” where the repairs on an older car make less economic sense than putting the money into new car payments?
When the repairs supercede the value of the vehicle. You are there. Though if I were you I’d wait for one of those sales where you push pull or drag it in and get a guaranteed 3k.
Are you really there though ? Some of that work is maintenance/consumables that could need to be done if you bought another used car anyway (ie brakes, tires, struts). I probably would continue to fix the car until the repairs got much more expensive or I believed the car to be unreliable - $100-200/mo is not that much money and well less than a car payment.
It’s a tough decision. $1500 is borderline, but the vehicle is probably worth ~$5k after the work and less than $3k without it, so I’d say it’s probably worth the repairs. Whatever you do, don’t ever take the trade-in. Trade-ins are the worst deal ever, unless you hate your vehicle and want it gone yesterday.
I say get it right again and then decide if you still want to sell it. This is not one of your plans, but I think you’ll wind up better off for it. That $4k trade really isn’t work $4k.
My brother was just faced with this-his 8 year old Ford Crown Vic (looks like new), with 160,000 miles, needed:
-a new catalytic converter
-new radiator
new tires
-new hoses
-new brakes
Now he has a new car-good for another 150,000 miles.
For $2000, much better than buying a new car.
We have a 2000 Xterra, and haven’t really put that much money into it - the occasional break job, and I think the catalytic converter went when it was (thankfully) still under warranty. Only 89K miles on it, though.
We plan on driving it until it dies. It’s getting pretty rusty so that might come quicker than if we lived in a less-harsh climate, but so far, it’s been a great car, and we see no reason to get rid of it.
Of course, we might buy another car in the meantime. But we’re in absolutely no hurry to do that.
Consider option A, where you put the money into repairing the vehicle you have. This is often the best value for the money, provided a major repair situation (engine or transmission failure) doesn’t arise.
Consider option B, where you put the money you would spend on repairs, plus whatever you can get selling your car as is, into buying a replacement vehicle.
Which would you be happier with: your current vehicle fixed up, or the replacement vehcicle?
Now, the above usually means getting a used car for option B, as many folks aren’t in a position to buy a new one. Your Plan Two expands that into spending even more money, but then ending up with a new car rather than a used one. So the question becomes, would you be happier with your present car fixed up for 1500, or with a new car for 3000-4000?
As said above, some of your costs qualify (in my mind, anyway) as “general maintenance” which I would expect no matter what car I own. New tires (snows and summer) every few years, break pads and occasional related parts. That stuff just comes up, and buying a new car to avoid maintenance costs is probably going to cost you money in the long run.
That said, I’d figure out what your non-maintenance average monthly costs are, and compare them to a projected car loan. As long as your car is reliable, it makes ‘money’ sense to keep the old one; even if it feels like you’re dropping cash into it all the time, you’re still getting off cheaper than buying something new.
That said, there’s a point where those values start to approach one another where the benefits of having a new car might be worth the difference between the costs.
Current BB value on that vehicle is about 2500.00 (given a generic search). The OP has at least half that in fixes. Fixed, they might get 3200.00. Not a bad deal to fix and trade in if you can get someone to pay higher end for the car.
One thing to consider is that if you do wait “until the wheels fall off” is that you may be under pressure to replace the car quickly. Unless you have a second car, or can borrow one, you may be forced to drive a rental until you can replace it. So that will put you under pressure to get a new one quickly. If, on the other hand, you don’t wait quite so long, you can replace it more leisurely.
I haven’t searched very hard, but Kelley puts it at $5180 for an SE and $4125 for an XE private party value at 129k in good condition in my zip code. I thought SE was the lower trim, so that’s what I based my initial response on to come up with $5k, but I had it backwards.
I’m not saying Kelley is the gospel of used car value, but $2500 seems really low. If that’s the true street value as a private party sale, then I agree with your math. I’m just not sure I agree with your valuation, especially since neither one of us knows which trim we’re talking about.
$1500 is about 3-4 months of a new car payment. If you put $1500 into the car, it’s likely to last longer than 4 months. So all the time you keep the that’s greater than the 4 months is to the good. If you keep the car for another 18 months, that would give you $7000 towards your next vehicle, if you put that $500/month aside.
I just realized I didn’t read the OP carefully. A new car for 3-4 grand? :smack:
Obviously that changes the arithmetic, but my basic questions stands: which “I spend this amount of money and end up with that car” scenario do you prefer?
I just want to mention that if you do decide to get rid of your vehicle it might be a good idea to do it fairly soon. February, March, even into April, people are getting their tax returns, often intending to use that money towards a vehicle. I believe you can usually private sale a vehicle for more money than you will get towards a trade-in. Plus it is cash in your hand, no double dealing from the dealers.
Since the car is RELIABLE and only needs maintenance (that works out to 1-200\mo) it’s still a good deal.
If you WANT a new car, consider getting it really nicely detailed for $100, maybe an ipod adapter or something small to keep the “but I want a new car!” feelings at bay.
My rule of thumb has been when your average monthly repair bills equal what your monthly loan would be for a new car, its time to get a new car. Otherwise its still cheaper to keep the old one. Thats just looking at the $s. That is not taking into condideration the feeling when you have a new car and what is that worth to you. Plus, the security of it not breaking down and leaving you stranded, plus knowing you have a warrantee. Other considerations than just the cost.
Brakes, struts and tires are general maintenance; a radiator leak probably isn’t a big deal…a new AC compressor is probably the biggest part of that $1500, right? All cars need spendy repairs once in a while.
So you have an otherwise reliable car that you enjoy, with relatively low miles. I’d keep driving it until the cost of the repairs get intolerable. As others said: until the cost of repairs far exceeds the cost of a monthly car payment and full-coverage insurance, put money aside and hold onto it. Or, if you just like driving newer vehicles (which is fine) then go get one.
Or do what I did: I have an old Nissan truck with over 260,000 miles on it. I adore that little truck; it’s been astonishingly reliable and has never failed to start. AC compressor and various other non-essential things have gone out and never been repaired, but I keep it around for times that I need a truck or an alternate vehicle, and otherwise drive something a bit newer with more working parts. It’s worth the $60-odd a month insurance, and I still use it quite a bit.
We recently replaced a 12 year old car. It started acting up and getting more expensive to fix about 18 months ago. We looked at new cars, but the repairs were still less than the monthly payments on a new car. So we spent $1500 on repairs, and drove for another year and a half.
Last month, the transmission starting acting up, and the mechanic said that there were also problems with the valves. It was going to be several thousand dollars to repair, if it was possible to repair, and they can’t tell until they start taking things apart. In addition, it’s winter again, and the tire need replacing. The combination of larger repair bills, needing to replace tires, and wanting to have a more reliable car in the winter tipped the scale for us. The new car was bought 3 weeks ago.
