Reader Brenden says:
I looked around the site and didn’t see any handy guide for a situation that I, and I’m sure many others, are in. We have an older car that still runs, but occasionally needs work. At what point do you begin experiencing diminishing returns on your investment? I know there is no hard and fast rule but there has to be reasonable guide lines when it comes down to how much to put into an old car before its just not worth it anymore. I don’t meant to make a request (especially since Consumerist helped me out before) but I think an article on this might not go unappreciated.
Essentially, what you have here is a math problem. There are several factors that you’ll want to consider when making your calculations.
1) How much money have you been pouring in to the car? Grab all of your receipts and total them up. Then ask yourself this question: “What is the current state of my car?” If you’ve just fixed it up and it’s going to be running great for some time, you might want to keep it for awhile. If you’re barely keeping up as one thing after another breaks… it might be time to say goodbye. If you’re unsure about this part of the process, call your mechanic or a trusted friend who knows something about cars. Ask if parts for your car are getting expensive, and if it is going to be worth maintaining.
2) Do you own this car? Your relationship with your car depends a lot on whether or not you actually own it. Everyone’s situation is going to be different. What is the actual value of your car? Can you get anything for it if you sell it? If you’re not used to paying a car payment, are you going to want to start? Run the numbers and see what this car means to you financially.
3) Does this car get good gas mileage, and what does it cost to insure? Calculate the operating expenses of your car. A newer car may save you money on gas, or it may not. It’s probably going to cost more to insure. Once you know what your current car costs you, you can compare it to the numbers for your potential new(er) cars.
Now that you have an idea of what your car is actually costing you, you can start comparing it to what a different car might cost. You might find that your old car is very cost effective, despite the repairs. Or you might not. Generally speaking, however, a car you own is better than a car your bank owns. Personally, we enjoy buying slightly used cars (that we can afford) with cash. Good luck!
Anything we missed? Share your tips for Brenden in the comments.
(Photo: The Joy Of The Mundane )