Perhaps this scenario is familiar to you. Your car broke down and now you’re faced with a costly repair bill. It may not have been the first time this has happened and you’re getting tired of pouring money into an aging machine.
A new car would be nice, but is that the smartest decision in today’s inflated market? As new and used vehicle transaction prices continue to hit record highs, many owners are asking themselves: “Should I fix my car or trade it in for a new one?”
The average 12-month repair and maintenance cost for a 5-year-old vehicle is $205; that increases to $430 for a 10-year-old vehicle, according to a 2020 survey from Consumer Reports. But if you’re one of the unlucky ones who had a catalytic converter go bad or get stolen, it cost an average of $1,383 to repair, according to a 2021 report from CarMD. That may not seem like much, but there’s no guarantee that another issue won’t rear its head in the future.
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The answer will differ for everyone based on the repair costs, age of the vehicle, comfort level with driving an older vehicle, and more. With these things in mind, here are some pros and cons for each option to help you make a more informed decision.
Arguments for fixing your car
If buying a new car doesn’t fit your budget right now, or you prefer to let the market cool off, it might be a good idea to fix your car to get a bit more life out of it and avoid making a hasty car purchase.
Generally speaking, it is almost always less expensive to repair a car than buy a new one. Even something as severe as an engine or transmission rebuild will cost you roughly $1,200 to $5,000 — far less than buying a new car. And while $3,000 to $5,000 would make a nice down payment, you’d still need to consider the monthly payment, which is $637 on the average new car with a 70-month loan, according to the latest Edmunds data. Used cars might not be much relief either, as the average payment hit a record $535 in late February.
On a new car, insurance and registration fees will be higher than for your current vehicle, so you’d need to plan for that as well.
Arguments for buying a new car
Old cars can be unpredictable. If you’re tired of the constant visits to the repair shop and the maintenance costs are getting out of hand, it may be time to buy a new one. Similarly, if the car leaves you stranded often, causing you to be late for work or putting you or your family in a potentially dangerous situation, a new car can bring you much-needed peace of mind.
You won’t have to worry about paying for repairs for the duration of the new car warranty, roughly three years or so. And major repairs are not likely to occur for a few years past that time. Even opting for a more reliable used car, such as a certified pre-owned vehicle, can be enough to calm those nerves.
Finally, the new car will also be much safer, both in terms of its rigidity, crumple zones and modern safety equipment. Features such as automatic emergency braking, backup cameras and blind-spot monitoring are increasingly becoming standard on new vehicles.
Extend the life of your current car
If you are not yet faced with making the tough decision to fix up or trade in your vehicle, there are a few steps you can take to prevent or avoid costly repairs.
Get your new car maintained at its proper intervals to avoid problems and breakdowns. Use your owner’s manual to learn the recommended service intervals for your vehicle.
Maintaining a much older car means paying close attention to items that commonly break down. We recommend finding a good, reliable local mechanic as a less expensive alternative to a dealership service department.
If you’re experiencing issues with your car and don’t know whether things are likely to get worse, look for advice on message boards and forums for the make and model of your car. Other people have probably been down this road before you, and you can get a preview from them of the problems associated with your vehicle as it ages.
EDMUNDS SAYS: Buying a new car might seem like the easy way out of a high repair bill, but depending on your circumstances, it may not be the best financial decision. On the other hand, if the fear of being left stranded keeps you awake at night, it is better to part ways on your terms rather than waiting for your vehicle to break down at an inopportune time.
