When to replace your car

When to replace your car

Over the holidays, we said good-bye to an old family member. It was definitely her time to go. She leaked, she conked out at odd times, and she stank. Of course, I'm talking about our old vehicle: a minivan with 182,000 miles on it. I didn't let go of her easily; after all, we didn't get rid of our previous car until it had 264,000 miles on it. I figured we could get the minivan to at least 200,000.

But while visiting relatives in Florida, we had the opportunity to buy a used minivan from my sister's meticulous neighbor for a great price. So we took it. I have to admit, it's been a huge upgrade. It has all kinds of luxury features that our old minivan didn't have, such as:

  • When you turn it on, it stays on until you turn it off.
  • When it rains, the water stays out of the vehicle.
  • There's an electrical device in the cigarette lighter that I can use to charge my cell phone, rather than just an empty hole where an electrical device used to be.
  • The speedometer is an accurate reflection of the speed I'm traveling, rather than a number to which I have to add five to 15 mph.
  • The brake light comes on only when the emergency brake is actually engaged.
  • It has this thing called “air conditioning.”
  • It doesn't stink. (The smell in the old car came from water coming in and getting the carpets all moldy.)
  • It has a “keyless remote,” which is a device on the key ring with buttons that, when pushed, cause the side doors to slide open.

(Regarding that last feature, here's a trick you can play on the uninitiated: I put the keyless remote in my pocket, and told my mom and my aunt that the doors were voice activated, but you had to use the secret word. In this van's case, I told them, the secret word was “monkey _____.” Since this is a family website, I can't print the actual word, but use your imagination and you'll be close. So I got my 70-something mom and aunt to yell, “Monkey ____!” at the van, pressed the button in my pocket, and — voila! — the doors opened. They just couldn't get over it. “I have to get me one of those!” my aunt exclaimed. I let them yell, “Monkey ___!” at the van for another 15 minutes, closing and opening the doors, until I told them the truth. If I had videotaped it, we'd all be YouTube heroes by now.)

Drive a Lemon, Save Some Cabbage

I take my share of barbs from family and friends for driving clunkers. But for me, there are two driving (no pun intended) factors: 1) money, and 2) safety. Let's look at the first one.

At what point is repairing an old vehicle just throwing good money after bad? Here's one way to look at it: According to Comerica Bank, creator of the Auto Affordability Index, the average cost of a light vehicle last year was $25,500. If you had to finance that total amount over four years at the going rate of 6.56% (according to Bankrate), it would cost you $605.44 a month. If you spend less than that on repairs of the old vehicle, then keeping it saves money…at least for the next four years. At that point, the newer car would be paid off, and the old car would be really old.

But in the meantime, if it cost you only $200 a month to maintain the old vehicle, you saved $405.44 a month, or $19,461.12 over four years. Not too shabby.

While that's helpful as a way to begin to think about the question, it doesn't really help with determining a bottom-line number for an actual person because it's based on an average number, 100% financing, and the purchase of a new car. To help someone like you — who is non-average, who likely wouldn't finance the entire purchase, and who might be buying a “pre-owned” car (which, to me, is an inappropriate term, since “pre-owned” should mean “before it was owned,” that is, new) — you'll have to whip out a spreadsheet and factor in all the costs. That includes assuming higher maintenance costs for the older car, but also higher insurance, higher property tax (if you, like me, live in a state that charges such things), and transaction costs after replacing your jalopy. It's not an exact science, since it involves forecasting future maintenance costs — an impossible task. But it will give you some numbers to think about. In most cases, I bet the analysis will show that keeping the old car is the way to go, financially.

But then There's Safety

Did I do just such an analysis when I decided to replace our old minivan? Not exactly. We had reached a point where we were spending more than $2,000 a year on maintenance, and I had a rough idea of how much it would cost to fix the major problems with our van. Then this opportunity came up, to buy a van from one of those people who perform regular maintenance and have the records to prove it, at a price $2,000 to $5,000 below what it would have cost me to get the same vehicle from Craigslist or Carmax.

But what really got me was that the old van just didn't feel safe anymore. Something was always going wrong, and I didn't want something major to happen while my wife was on the highway with our kids. And I must admit, it's nice to have a car that stays dry, has A/C, and doesn't stink…yet. If I ran the numbers, I suspect my spreadsheet would have said, “Keep the old car.” But as readers of this website know, financial decisions don't always come down to dollar and cents.

So I feel comfortable with the decision we made. As for our old van, my sister and brother-in-law got the major problems fixed and arranged to have it donated to a church they work with, so we'll get a tax deduction out of the deal (another factor that would have gone into the spreadsheet) and the van will hopefully last long enough to do some good. My relatives in Florida approved of the trade-off, especially those who make jokes about the heaps we've driven, and believe that any car should be replaced once it reaches 100,000 miles.

Yet the math clearly shows that driving a car well beyond that point is the right thing to do for your net worth. According to Comerica Bank, the purchase of a new car costs 21.9 weeks of a median household's income. That's working 42% of the year just for a car. To me, acquiring a new vehicle before it's necessary is a bunch of financial monkey _____.

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H, Kang
H, Kang
10 years ago

Great Post! I have a 97 Camry that is pushing 210k and I’ve been debating on whether to replace the car or not. Last year I spent $1600 on some major issues that came up and I have a feeling the next fix will be at a similar price range. My friends and family also make fun of me for driving such a clunker but I don’t mind. It gets me from point a to point b no problem. I have been thinking though that once the repair costs are greater than what the car is worth, it may be… Read more »

Mrs. Money
Mrs. Money
10 years ago

I was driving a 1993 Oldsmobile Achieva until last year. I truly loved that car and was sad when I had to get a new one. 🙁 I much prefer the old car to my new one that has a car payment!

TosaJen
TosaJen
10 years ago

As the owner of a 94 Toyota Corolla with 170k miles on it, I’m with you in keeping cars until they feel unreliable. I keep meaning to get a bumper sticker for it that says “No car payments since 1996.” There’s something to be said for not feeling particularly worried about the car being stolen or dinged, or having stuff spilled in it. Every time we need something fixed, we set a maximum, so that we’ll have a good idea of when it will be time to retired the old girl. I keep hoping that my parents will decide to… Read more »

Connector
Connector
10 years ago

Thanks for including an article on when to replace your car. I’ve been pondering the question regarding Jolly Green Gene (my car). JGG is a 96 Chrysler Voyager (the short version) with only 90,000 miles on the odometer. In 2009 I paid $6967 including all taxes, insurance, license fees, gas, and maintenance fees. I’d spoken to my insurance agent about whether replacing JGG with a recent-model (2003-5) used sedan was a good idea. He told me something wise: He said that since the insurance costs would be about the same, and since the mileage on JCG car was so low,… Read more »

James | Tech for the Masses
James | Tech for the Masses
10 years ago

Robert,

Great article and right on target. I believe in driving your car into the ground and saving what you would of spent on a lease/car loan. Then buying a certified used car outright. Obviously over time you get small upgrades (in your case, a huge one!). Nice job!

James

CR
CR
10 years ago

This is timely for me! I just picked up my 93 Volvo from the mechanic, after it died on me for the second time in 2 weeks at a busy intersection (although there are other cosmetic and comfort problems with it, it has never been unreliable). I am ready for a newer car, but we’re in the middle of trying to buy a house and car is the lower priority until we’re settled there. I know I am not going to like car payments, and that financially it still makes sense to fix the occasion problem, but I don’t like… Read more »

Joe M
Joe M
10 years ago

It sounds like you’ve been driving with a major safety issue for quite a while and have chosen to ignore it. Breathing in mold spores in a confined space is especially dangerous for children and “70-something” mom’s. Saving money is great but it shouldn’t come at the expense of safety.

Minderbender
Minderbender
10 years ago

Our children learned to drive in our Corolla, the same car they travelled around in their car seats in years past. My wife was driving our daughter and a friend once when the friend asked her how to get the window down. She was looking for the button-had never seen a crank handle to roll down the window.

I usually try to buy 2-3 year old cars and drive them for a long time, though I did get a new car last year when prices were very low. Before that, the newest car in the family was a 2001.

Karen
Karen
10 years ago

We just retired my husband’s 1992 Nissan Sentra. Last year we spent $2,600 in car repairs on it. The engine still worked; but everything else was falling apart. We decided in early December to go to one-car. We tested it first before making the commitment to bid good-bye to the Nissan. After a one month trial run, we decided that we can get by with one car. We also became members of ZipCar, just in case we both need a car at the same time. My husband works the mid-night shift, and I walk to work, so it hasn’t been… Read more »

Jonathan
Jonathan
10 years ago

Great article. Makes me feel much better about keeping my 20+ year old Corolla with over 180,000 kms for a while yet. Deep down I know it should be reliable for at least another 100,000 kms. I’ve tried to justify a new (second hand) car in my head many times from the whole ‘economy’ angle. Where getting a smaller car will eventually pay for itself through lower fuel/ maintenance costs. But when I do the sums even in my head, the break-even point is so far into the future that it’s far more cost effective to simply keep maintaining the… Read more »

Bananen
Bananen
10 years ago

Are there any laws in the US on how broken down a car can be, before it’s illegal to drive it on public roads?
I’m asking because we have some quite strict laws on this, which forces you to either spend a bunch on repairs, buy a new car or take the bus.

Kathy
Kathy
10 years ago

I absolutely enjoyed and agree with this article. I drive a ’92 Merc that my mom sold me for $1 a few years back. It’s got 90,000 miles on it and has been in a few wrecks, but all in all it’s a great car. And it’s going to help me attain my financial goals in the next two years. Yes, I get laughed at. I’ve gotten used to it and frankly I’m the one who is going to be chuckling when I’m debt-free someday down the road. I figure if I’ve spent less than $1,000 on it per year… Read more »

Adrienne
Adrienne
10 years ago

The car thing has always been hard for me. When really is the right time to say goodbye to an old car? If I had a crystal ball for coming repairs it would make it easier. The whole “feel safe” is more of an emotional thing (and can feel safe to one member of the family but not another). On an up note just want to give a shout out to my 10 yr old Ford Taurus Wagon. Bought 3 yrs ago for $4500. Would never have bought a Ford Taurus except that I drove one for years as a… Read more »

EscapeVelocity
EscapeVelocity
10 years ago

If I had a newer car, I would feel obliged to carry comprehensive insurance, which is another big price difference. On the other hand, of course, if this car is totaled I don’t want to go out and buy another 14-year-old car, so it’s important to have some reserves on hand.

Of course, how inexpensive a vehicle you can get away with depends on what you’re carrying around in it, particularly the size of ego.

Trini
Trini
10 years ago

I’m all in favor or driving every last drop out of your car, but PLEASE maintain it and keep the emissions under control! One of my biggest pet peeves are the cars on the road that leave a trail of chemical stink behind them. That’s both rude and bad for the environment, and I wish more people would suck it up and fix or replace the car when it gets to that condition.

Chris
Chris
10 years ago

I have bought 1 new car. Going on 12 years now without any major issues. Still going great!

I have bought 4-5 used cars (all of them “certified”). All but one have had major issues within 1-2 years. (over about 15 years)

When I added up all I spent on used car maintenance, I am 2-3x what I have spent on my 1 new car. I keep trying, hoping to get the supposed savings, but replacing transmissions, engines, brakes, wheels, and everything else sure makes it difficult.

Charles
Charles
10 years ago

You should mention a common auto purchase philosophy, “drive it til it drops.” I’ve done this, it is quite economical. The idea is simple, buy a beater, something cheap like under $500, a car that passes safety inspection but that’s about all. Then do ZERO maintenance on it, except for replacing fluids (oil, coolant, trans fluid, etc). Then drive it til it stops running, sell it, and start again. I did this once, quite a few years ago, I bought an old 1967 Dodge Dart for $500, it was 15 years old at the time. It had a clogged up… Read more »

Tim
Tim
10 years ago

Liked the article. I kept my old civic until I felt it was unsafe and too small for my liking. It was great to have the extra cash around by not making payments and having reduced insurance. I was able to take some nice vacations and have some memories that will never fade. However, once the baby was on its way I wanted an updated car with better crash ratings, airbags, and better features (power windows). Bottom line, I could have bought a cheaper car but if I am going to buy something that I will have around for 10-15… Read more »

mary b
mary b
10 years ago

We just went through this dilemma when my old Explorer would not pass inspection unless it basically got a new engine. So for us that was too pricey and it was time to say goodbye to it and get something else. Found a great pre-owned mini van at auction which will hopefully last a while.

BTW–I always thought “pre-owned” was short for Previously Owned.

ami | 40daystochange
ami | 40daystochange
10 years ago

So long as we can maintain our cars and stay ahead of the amount it would cost to make a car payment, we’re going to do it.

For those who decide to stick things out, aside from mechanical maintenance, it’s worth it to splurge on a complete interior/exterior clean/shampoo/detail. Having your car look/smell nice and shiny helps maintain the right mindset for keeping an old faithful friend.

Suzanne
Suzanne
10 years ago

@11: I think car maintenance laws vary by state. When I lived in Connecticut I had to have my car officially tested by the DMV every year or two – and it was rigorous! You had to be able to open all doors from the inside and outside, use the wipers, lights, etc.

Now that I’m in Chicago I think I’ve had to have my car tested once in 6 years and that was just for emissions. On the downside, I frequently drive behind such clunkers that I worry some part of their car will fly off and hit mine!

Adam
Adam
10 years ago

I live downtown in Toronto and have a 2 minute walk to work every day, so my car doesn’t get much use except on the odd weekend when I have to visit family in the suburbs. My car was brought brand new 10 years old and has about 60,000 miles on it (100k km). It runs great and I do regularly maintenance every 3-6 months (oil change, fluids, etc.) and every once in a while I’ll spend real money to get a filter replaced or the rad flushed. It looks great, no models replaced it (discontinued) so it will always… Read more »

Tyler
Tyler
10 years ago

Having purchased an ’09 Chevy Malibu and an ’09 Toyota Rav4 last year, I am ten years away from getting to a drop-dead point on either vehicle. But if either vehicle starts leaking water or smelling, it’s an instant “repair or gone” scenario. No moldy/old cat litter smelling car for me.

Lizabeeth
Lizabeeth
10 years ago

This is a very good idea! If I could just get my husband on board with it. This past Christmas he bought me a brand new Mercedes. It was parked in the driveway with a big red bow on it. Frankly, I didn’t want the car. I would’ve been fine driving my 2 year old car for a bit longer.

Melissa
Melissa
10 years ago

@11 – Car maintenance laws vary, testing regs. vary by state. In PA, we require both yearly emissions and inspection…but emissions requirements vary by individual county.

It sort of amazes me how a lot of people ignore glaring safety issues with their vehicles or try to pass off inspections by a thread in the name of being cheap. If you have a nagging suspicion that your car is unsafe to YOU but you refuse to perform maintenance, you’re also being a menace to other drivers.

Cdoc
Cdoc
10 years ago

I agree with keeping a car around as long as it is safe, reliable and in good working condition. (smelling bad and no AC would have to go) I’ve always had a long commute so reliability is important to me. I like to buy new and drive them as far as they can go. I get a 5 yr loan. When the loan is up, I keep making payments (to myself or on a car for my wife). I figure if I can get another 5 years out of the car it has paid me back. I’ll always have 1… Read more »

Sam
Sam
10 years ago

You can also rent cars for long trips or when you need a nice car when family comes to town. We did that a few times during the last two years of owning my prior car and we still came out way ahead.

Andrew
Andrew
10 years ago

Timely post. We have a 10 year old Nissan Sentra and a 6 year old Toyota Matrix with 95,000 miles on each, both paid for. Changed struts, tires, fluids and filters on them both recently. I also detailed them to please my wife who has been asking for a newer car. I gave her the option of a nice overseas trip every year or a pre-owned car with car payments but we cannot do both. She chose the trip. I just opened a new sub-account with ING Direct and will transfer funds weekly to fund in cash a newer preowned… Read more »

TeresaA
TeresaA
10 years ago

My car is a 2000 Saturn with 134,000 miles on it. My husband has a 2001 Chrysler with 160,000 miles on it.

We’re keeping them until they become unsafe or are too costly to fix (like if the engine goes).

For occasionla long trips, we rent a car.

Marian
Marian
10 years ago

Like Karen, my husband & I decided last year to downsize to one car. We drive a 2000 Saturn wagon with 97,000 miles. Last year we spent $400 on service including routine oil changes. This year we will put in new shocks & may have it done by the local school to save more money. Then I’m going to take the old girl to the car detailing place & have it cleaned inside & out. It will look great. Heck, we’ve saved so much money this year on transportation that we can pay cash for a trip to Costa Rica… Read more »

Jason
Jason
10 years ago

I am surprised that many people who talk about not having had car payments in years by driving 10+ year old cars never planned for replacing that vehicle. By mentioning that they will not like having to live with car payments. Maybe I am making the assumption that because you drive an older/paid for car, you’re debt free. For some I am sure that is not the case and you simply can only scrape by with that kind of vehicle. But for most did you not think you’re car will eventually run out of steam? If you’re keeping a car… Read more »

Peter
Peter
10 years ago

What about safety. I am sure the newer vehicles have better safety goodies installed than the older vehicles. But how old is safe is something worth discussing. I am not an expert on this one. But I had like to have some one comment on this.

For example, a 2006 Ford may have more or less same set of safety features as a 2010 Ford, but definitely not the same as 1990 Ford.

Preston
Preston
10 years ago

I currently drive a 2001 Chevy Cavalier that I paid $100 for. It was on its way to the junkyard and the previous owners couldn’t get it started. They said it sat for six months. I jumped the battery and that got it going. I had to replace the tires and the battery. Right now it needs a $300 brake job which I am thinking about — but I’m not sure I want to put money into it. It leaks gas if you try to fill it up all the way. The passenger window doesn’t close all the way, the… Read more »

Steven
Steven
10 years ago

Good job, you care more about your wallet than the lives of others.

Driving a car with a broken speedometer? Seriously? It’s also illegal.

Mike V
Mike V
10 years ago

I have a friend who just replaced his car. He is the type who thinks replacing a car about once every year or two is a necessity. He is 26 and has had 8 cars, from clunkers to brand new. His old 2001 Jeep just turned over 90,000 miles, and in his eyes it was falling apart. It needed $1800 in repairs according to him, but it still ran fine. He caught car fever in mid-January and bought a 2004 Grand Prix with 92,000 miles two weeks later. I don’t think my friend has ever paid off a loan in… Read more »

Mylegs
Mylegs
10 years ago

We have new cars that are both now paid off–06 and 08. Prior to that we had used ones that were money pits. I felt they were safe and certainly the money that we spent on them was less than what the car, properly fixed up, was worth. However, one thing that I haven’t really seen much comment about was the “hassle factor” involved in fixing an older vehicle. There’s time and worry involved in diagnosis, shopping for the best service and price, having the repair done, and the inconvenience of not having a car. And then there’s the time… Read more »

wendy
wendy
10 years ago

hmmm, my guess is monkey MADNESS? no? ok, monkey BUSINESS? well, i just can’t think what it might be…
anyway, i have a 10 year old nissan sentra that is at about 175K miles. it’s been a wonderful car, and my 2nd sentra. my husband’s titan, however, we bought used a couple of years ago and appears to be a lemon. we will be trading it in, as we need a vehicle for our year-long road trip. great post!

Tracy
Tracy
10 years ago

Great article – I drive a 1996 Sentra with 116k miles on it (Bought in 2000 with only 14k on it). The one thing I havent seen mentioned is the differences in mileage for new cars. My car gets great mileage and I cringe when I see ads for new cars getting worse mileage!

Craig
Craig
10 years ago

I waited till my car literally died before getting a new one. I’m not a car person and don’t care about that at all, and would rather put money towards other things and savings unless I absolutely need to spend on a car.

TeresaA
TeresaA
10 years ago

@Jason: Yes, we are saving in anticipation of eventually needing to replace our older vehicles. That, to me, is a given. No, we are not debt free, but we are steadily and agressively working on it. Driving an older/paid for car is part of what is getting us there. No, driving an older vehicle is not our only option. We could both “afford” to go out a finance a new or newer vehicle right now…but getting out of debt is much more appealing to us right now. Finally, our cars are well maintained and safe. They are 10 years old,… Read more »

beforewisdom
beforewisdom
10 years ago

When to replace your car?

Synopsis: When it is *WORN* out.

Hang on to it and you will know when, without fancy formulas.

Most people use mathematical formulas to rationalize a decision to buy a car for reasons other than their current car truly being used up. That is perfectly fine, BTW.

beforewisdom
beforewisdom
10 years ago

This article describes my relationship with my nearly 20 year old 1991 Honda Civic which I bought used in 1999 with 50,000 miles on it for $6,000. It is now 2010 and the car has 194,000 miles on it. I saw the business end of a tow truck about 3 times last year, the last major repair was embarrassingly expensive, something needs to be fixed every few months, sometimes with used parts because new ones don’t exist, the same things keep breaking over and over again. No air conditioning and my window leaks in the rain. I have two more… Read more »

Nate
Nate
10 years ago

“But in the meantime, if it cost you only $200 a month to maintain the old vehicle, you saved $405.44 a month, or $19,461.12 over four years. Not too shabby.” First, if you are able to purchase directly without financing (certainly possible if you trade in a 5 year old vehicle). Then you are only saving $15,961. Still a large amount, right? WRONG, these arguments always forget a tiny fact a car is an asset (a fast depreciating asset, but it is still one). Your $25k car with 48,000 miles will be worth between $10k and $15k depending on make/model… Read more »

aceofwealth.com
aceofwealth.com
10 years ago

What kind of analysis do you put into it when your old car has a *very* expensive repair? Of course you would like to believe that after doing that repair you would be able to get your value out of it, but how do you weight the options?

Alexandra
Alexandra
10 years ago

Mylegs – I completely agree that people who are driving very old cars seem not to factor in the fact that they are spending time as well as money getting their cars fixed when the inevitable repairs are needed. My husband drives his car from one client appointment to the next one (and the next), all over the city. If his car needed frequent repairs he would not only be extremely inconvenienced by the time he would have to take to drop off the car and get the estimates, etc., but he would have to rent a car in order… Read more »

beforewisdom
beforewisdom
10 years ago

TosaJen, post #2

Word!

I love not having to be worried about theft or small scrapes. I also thought about a “I own it” bumper sticker 🙂

BTW, if you are looking for a maximum dollar amount to pay for repairs before selling, you can go on Edmunds.com to find out how much your car is worth.

Even so repairing is cheaper than buying if you aren’t repairing all of the time.

Alexandra
Alexandra
10 years ago

Oh, and knowingly driving a car with moldy carpets when you have kids?

No amount of money in the world would ever entice me to expose my child to mold spores in a small enclosed area.

This is why I really dislike this new “trend” of being thrifty – sometimes people tend to lose sight of what’s really important in the pursuit of saving a few lousy bucks.

Anne
Anne
10 years ago

Trusted mechanics also help a lot. My mom “lent” me her ’96 Corolla for two years (we sold it back and forth for $1). It’s a wonderful car but some maintenance is unavoidable. Our mechanics were able to give me a minimum 3 months (usually closer to 6) on all repairs so nothing came as a surprise and there was no panic. Having time to decide and plan helps a lot. I have a new (to me, ’06) car now and, like Craig #38, while I love it I’m just not a car person and will probably drive this one… Read more »

Dan
Dan
10 years ago

I drive a ’99 Chevy Malibu with 128,000 miles on it. It’s served me well, and truthfully, I’ve only had to put $2500 or so into it (beyond fluids and oil changes) since I bought in in 2001. It’s starting to show its age, however, and the state in which I currently reside wants $2000 in repairs to meet the inspection standards. (I cheated and registered it in a different state that has no such rules.) My car runs well enough, doesn’t die at idle, and I don’t worry about not getting it started or stranding me on the side… Read more »

Shara
Shara
10 years ago

I’m with others here who say: if you have to drive a clunker, fine. But if you’re doing it just because you’re cheap you should re-evaluate. There are things you can live with and things you can, but shouldn’t. The radio went out, big deal. That isn’t going to compromise safety. But a speedometer going out? Your kids got glue on the seat, that’s nothing. But mold in the upholstery? If it’s still running fine then why not get these things fixed (other than you are that cheap)? If something on my dash went out my car guy would go… Read more »

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