If your old car is beginning to have problems, you may be wondering whether to sink more money into repairs or simply replace it. It’s a tough call, and a number of factors should play into your final decision.
New car costs
You could spend $15,000 to over $100,000 for a new car, depending on your financial capability. Decide how much you can afford, then calculate how much you will be paying monthly for the amortization of your new car. Don’t forget to add in other expenses, such as registration, insurance coverage, and gas.
Compare this figure to the amount you could spend on repair costs for your current car. While you will be paying less for registration and insurance coverage because your car is older, your expenses for gas consumption and maintenance could be astronomical.
If you see that the cost of getting a new car is almost the same as maintaining your old car, then getting a new car is a no-brainer.
It costs money to keep a car working well. With a new car, maintenance costs will be covered by your warranty for a limited time, but you will ultimately have to shoulder the expenses for oil changes, brake repair, tire rotations, and more.
If you keep your current car, your maintenance costs will likely be higher because it is older. Parts will continue to wear out and need replacement.
Consider how often your current car needs repairs. If something seems to break every time you pull out of your driveway, you are probably captaining a sinking ship. But if the cost of maintenance is just a little higher than the price of maintaining a new car, you may be able to keep your old car for a few more years.
Your budget will play a significant role in your decision to get a new car or keep the old one. Financial advisers suggest that people should not spend more than 22 percent of their net pay for a car payment. If that amount fits into your budget without causing any strain on your overall finances, then go for the new car.
If spending 22 percent of your net pay would mean that your family has to scrimp on a lot of other things, keeping your old car may be the better option.