We’ve all been there: Your cars in the shop — again — and the estimate makes you cringe. While repairing an older car is often cheaper than buying a new one, there can come a tipping point when you wonder if it’s time to dump your current vehicle and move on.
A mechanic has probably told you at least once that it’s time to get rid of a car once repair bills outstrip the vehicle’s value — a common rule of thumb among auto experts. But if you’re unsure whether your car is worth resuscitating one more time, this step-by-step guide can help you decide between repair and replacement.
Step 1: Check for warranty coverage
Before you write off your car, double-check whether it’s still under warranty. Most new vehicles come with a manufacturer-backed bumper-to-bumper warranty, typically lasting three to five years, depending on the automaker. If you’ve purchased an extended warranty or a certified pre-owned vehicle, you might have additional coverage you’ve forgotten about.
On the other hand, powertrain warranties tend to last longer — sometimes up to 10 years or 100,000 miles. These warranties cover all the essential parts that make a car move, such as the engine, transmission, axles and differentials. However, they don’t cover routine wear-and-tear or damage caused by an accident.
If the repair is covered under warranty, it could significantly reduce your out-of-pocket costs and make holding onto the car a no-brainer, at least for now. But before you decide, review your warranty and contact a dealership if you’re unsure about what’s covered.
Step 2: Evaluate the cost of repairs
Not all car repairs are created equal, and some can cause much bigger headaches than others. Plus, if you don’t do your homework, it’s easy to get ripped off. A little knowledge can go a long way when trying to save money on car repairs.
While replacing brake pads or a faulty compressor (which can still run you about $1,100) might not be the biggest deal, major issues like a failing transmission, blown engine or widespread electrical problems can signal the beginning of the end. Even relatively mundane issues can be surprisingly expensive. For instance, a dead battery can cost around $400.
But a new transmission typically costs between $4,000 and $7,000, while a new engine can set you back as much as $10,000. These types of repairs often point to a deeper issue and are often a sign that your car is nearing the end of its life.
This is where the common rule of thumb comes into play: If the repair costs more than the current value of the car — and it’s no longer under warranty — it’s likely not worth completing, especially when other serious issues could pop up later.
Don’t forget that you can always call around and get repair estimates from different shops. Dealerships often charge more for repairs than independent repair shops, for example. You can also use repair cost estimators like RepairPal to see whether your quoted price is fair or not, and to be directed to local repair shops. Ask friends and family about repair facilities they recommend – and, as importantly, do not recommend – based on past experiences.
Step 3: Factor in past repair history
Before giving up on your car, take inventory of what you’ve already invested in it. If problems have been piling up or a recently fixed issue is starting to resurface, those are signs that the car’s lifespan may be winding down (unless you’re prepared to put even more money into it first).
However, consider what you’ve invested in the car, at least recently. If you’ve just spent a grand on brand-new tires, for example, you might be reluctant to part with your car over an $800 replacement starter for your engine, if the vehicle doesn’t otherwise give you too many problems. But if it’s a veritable drain on your wallet, it might be time to swallow the sunk costs and cut your losses.
That’s especially because other repairs may well be coming. No one has a crystal ball, but you can still get a good idea of your repair costs soon. If you have a trusted mechanic, ask them for their opinion. You can also look up your car’s make and model online to see what kinds of problems are common with your car’s factory siblings using tools like RepairPal’s Reliability Rating.
Step 4: Consider your safety and the car’s reliability
If you’ve started questioning whether your car will start in the morning or how it’ll handle bad weather, that uncertainty is worth taking seriously.
And yes, it’s okay to just be over the car. When repairs start piling up, deciding not to invest any more time, money and energy into it might be the most reasonable (and relieving) choice. Safety, comfort and peace of mind all factor into whether it’s worth putting more money into an aging car.
Step 5: Assess how much you can afford right now
Sure — there are times when you have the freedom to decide whether to replace or repair your car. But not everyone can make that choice, given the cost of buying a car these days, even a used model.
Taking out a car loan on a used vehicle these days costs $525 per month and lasts for over five years, according to recent data from Experian. You’ll also generally need at least a 10% down payment if you’re financing your next used vehicle. Putting more down helps lower your monthly car payment if you have savings.You can play around with an auto loan calculator to see whether buying another car is even in the cards for you.
Keep in mind that you don’t want to be forced into buying a new car, which can happen if you prolong the inevitable with a car that needs frequent repairs. On the flip side, repairing your car now can give you a bit more runway to save up and work on your credit so that you’re in a better position to replace the car on your terms.
You should review your budget and determine what you can actually afford to pay, and whether that’s a realistic amount to replace your old car. If it isn’t, you might be all but forced to make the repairs, or go without a car until you’re in a financial position to pay for a new one. If you can afford to buy, make sure you follow the steps to getting the best price on your new wheels.
The bottom line
There’s no singular answer to when an old car stops being worth the repairs. Even if fixing it buys you a little more time, a car that’s become a constant source of stress may not be worth the hassle.
Ultimately, weigh the numbers against your budget and go with your gut. Sometimes letting go of an unreliable vehicle is just the right move for your sanity. If you opt for a replacement, make sure you follow the recommended steps to get your new car at the best price.
