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You’re looking at a $2,000 estimate to fix your car and, since it’s worth only about $2,000, it seems pretty clear it’s time to buy a new car.
Or is it?
Unfortunately, there’s no neat little mathematical formula that will tell you when to dump your old car. Instead, you’re faced with a ton of variables. Also, let’s face it: Most people would like to use a big repair bill to justify getting a new car.
So to shed light on this common , let’s isolate the variables to see if you need a new car or you just want one.
It’s always a good idea to start by examining your needs. Do you have a long, congested commute through the city? If so, you don’t want to be marooned in the breakdown lane waiting for a tow truck. A new car will definitely provide a higher sense of security. And a new car provides the latest technology such as blind-spot monitoring and emergency braking.
If, on the other hand, your car spends a lot of time at the curb, buying a new car would be a giant waste of money. But sometimes you need a car, you say? Here are just a few ways to get where you’re going or find wheels that are much cheaper than a car payment:
A $2,000 repair bill is a huge hit to your budget. But buying a new car is a much bigger and longer commitment. As a friend of mine used to say, $2,000 doesn’t buy you much of a car but it can buy a whole lot of repairs.
Repairing your current car will also save:
If you’re risk-averse, a new car is probably your best choice. It’s going to be more reliable, and if anything breaks, it’s covered by a bumper-to-bumper warranty. Although your monthly costs are higher, there are no surprise expenses.
However, a person who’s willing to shoulder risk is a person who will save money. That’s true when buying higher deductible insurance, waiving extended warranties and driving a used car. Sure, the repair itself seems like a risk, but it’s much less than meeting a new car payment and all the related expenses.
Not all mechanical problems are created equal. Here’s when fixing the car is a good idea:
And here are times when trading it in for a new car is an attractive option:
So you weighed your options and reluctantly decided to stick with your old car. Great decision. But you find that the lure of a new car is still hard to get out of your mind. Here’s a trick to subdue the new-car craving:
Every month, instead of writing a big, fat check for a car monthly payment, write yourself a check. Think of a car you want, use a to see what it would cost each month, and put that money into a separate savings account.
After doing this for a few months, reconsider the issue. Chances are, you’ll like still having that money in your possession. You can use it for future car repairs, a new set of tires or a thorough detail job. Or, if the new-car desire is still strong, you now have a nice down payment for the car of your dreams.