If you’re facing the question of whether or not you should repair or replace your car, know that you’re not alone. Recently, we had to make this decision ourselves if we should keep repairing our Volvo or if we should buy a new car (or a “new” used car).
Step #1: We Assessed Our Car’s Value
Check out Kelly Blue Book if you’re in the United States or the equivalent resource in your country.
I checked Kelly Blue Book on the value of our 2007 Volvo and discovered that it’s worth a little more than I anticipated, which was a pleasant surprise.
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Step #2: We Considered the Cost of Repairs and the Cost of Renting a Car
As a one-car family, having a car in the shop means we have to rent a car so that Garrett has transportation for his sales job. We’re spending about $45 a day to rent a car.
Once we shored up our own situation with a rental car, we took the car to a nearby dealership we trust. Since we expected the repair to be electronic in nature rather than mechanical, we decided to go to the dealer. Replacing the car’s computer and fixing the leaky hoses was about $1,500, but we know the dealer knows what they’re doing.
Rental + Repairs = $1,600
Step #3: We Compared the Cost of Repairs to the Value
If the cost to repair the car exceeded the car’s value, we would have explored buying a car.
We don’t have a rule about repair cost vs. car value, but it is somewhere between 50% and 100%.
Our car is worth about $4,000 and the repair is $1,500, so we’re under 50%. At this point, Garrett felt comfortable approving the repair. Anything over $2,500 would have been a different story.
Step #4: We Considered Replacement Options
While we waited for the dealership to call with a price, we explored new and used car options. Edmunds.com and Autotrader.com are great for starting the research process.
We made a list of features that we need vs. features we wanted.
We explored buying a car in another state to locate good deals.
We were flexible about make, model, and color.
Step #5: We Reviewed Our Prior Car Repair Expenses
Dad used to say that if you weren’t putting $500 a year into your car to maintain it, you weren’t spending enough.
After reviewing our car repair expenses as reported by Mint.com, we’re spending closer to $2,000 a year.
Even at this rate, we’d still end up spending less than if we purchased another car, but not by much. Of course, what are the chances that the next car never needs repairs? Highly unlikely.
Step 6: We Considered the Headache Factor
Is it just me or are there more models than ever before? We have cars coming out the wazoo in the US.
Shopping for a car is a headache and there is a certain Headache Factor to consider both pre- and post-sale.
Choosing to repair the car saves us from the arduous process of finding another.
Choosing to repair the car also means we can retain our emergency fund for a future purchase.
Choosing to repair also means we’re still on track with our investment goals.
Step 7: We Considered Our Financial Goals
Additionally, we reviewed our financial goals.
Cars are expensive, beyond the cost of the car itself and subsequent repairs. We’re in favor of saving and investing this year, and delaying the purchase of another car means that we can invest more this year.
With an eye on financial independence, we know our vehicle needs will change in the future, so more reasons why we should repair the car and stay focused on our goals. 🙂
Step 8: We Considered the Opinion of an Expert
In March 2018, the Volvo was going in for more repairs in the hopes that we could eek out another couple of months with the Volvo. Alas, it was not meant to be. On the advice of our mechanic who advised us that investing more money in our Volvo was not a good idea, we traded in our Volvo for our vanlife van, a Chrysler Town & Country minivan.