To service or replace… It can be a difficult – and often emotional – decision. Here are CANSTAR’s tips for knowing when to call it a day with an old car.
Plenty of people love their cars like a member of the family. According to our latest Canstar Blue research on auto stores, 1 in 4 Aussies give their car a name, and 1 in 3 talk to their cars.
(If your car doesn’t already have a name, why not try a car name generator like this one or borrow a car name from the celebrities?)
But no car is immortal – and most of us are not driving a brand-new car to begin with.
When the rubber hits the road, it’s hard to put a price tag on the peace of mind that comes from the safety upgrades in a new car. Even if safety is not your top priority, I can guarantee it’s vitally important to your passengers.
Cars today are being designed better and better, with more safety features coming as standard. Plus, an old car simply cannot remain reliable forever, since old and worn-out parts obviously work less effectively. So even if you saved some money by hanging onto that 20-year-old bomb you inherited from Grandma, a blown drive shaft while driving down the highway can mean a life-and-death situation.
Don’t let a broken-down car make the decision for you. Think ahead so you have time to make a reasoned decision that works for your budget as well as your passengers.
What are the pros and cons of repairs versus new car repayments? Answer the following questions and when you’re done, you’ll pretty much know whether your old car is worth keeping from a strictly financial viewpoint.
- How much is your car worth? You can check your car’s value with the RACQ Price Guide. A 10-year-old car may still have some considerable value, while that 20-year-old bomb from Grandma is probably worth $2,000 at most – or it may only be worth something to the wreckers. Note: If you’re going to sell your car pre-repair, you are required by law to let the buyer know about any repairs that need done.
- How much would it cost to replace your car? A car repayment plan for a relatively cheap car can be around a few hundred dollars per month, so it might cost less to just do the repairs. You can work out what your monthly repayment would be at different interest rates using our CANSTAR Car Loan Calculator. Oh, and did we mention that insurance and registration are more expensive for new cars? (Compare car insurance policies on our website.)
- How much are you paying in services per year? If you’re paying more in repairs than the estimated car repayments would be, a new (or “new” used) vehicle could give you some peace of mind. Future repair costs are unlikely to be needed anytime soon for a new car, and also fuel efficiency costs are lower than in old cars.
- How much is this repair going to cost? If the repair costs less than half of the car’s market value, it could still be worth doing. But if the repair is going to cost more than the car is worth, cut your losses. Take that 20-year-old car from Granma. If it’s only worth $2,000, then repairs of $2,000 are worthless because you know the car is on its way out anyway, and more repairs are coming down the road.
- How long will this repair keep your car going? If the repair is for a once-in-a-while issue and will keep your going for an extra few years, it could be worth it.
- What can your budget currently afford? If you are currently struggling to pay an expensive repair every now and then, then your budget will probably also struggle to pay a few hundred dollars a month in car repayments.
Once you have these numbers, you are equipped to make a better financial decision.
Don’t be afraid to get a few quotes if your mechanic gives you a number that is downright terrifying. Other mechanics can give you a quote without seeing the car, as long as you can tell them what repair it needs. Get them to email you the quote if you can, so you can see how much of the price is labour costs (which can vary hugely) and how much is the cost of parts (which shouldn’t vary much).
One last thing you might not have considered: Have there been any recalls on the part you need to get repaired? You could be getting it repaired for free by the dealer if so. You can check your car manufacturer or dealer’s website for recent recalls.