When To Give Up On Your Car

One of the toughest questions I get on the radio usually starts something like this: “Jerry, my car has 165,000 miles on it and it needs $3,500 worth of repairs. Should I fix it or get rid of it?”

I wish there were a simple formula I could give everyone, but there isn't. I've seen vehicles with 200,000 miles that I wouldn't hesitate to drive across the country, and I've seen vehicles with half that mileage that I wouldn't trust to get me across town. Mileage matters, but the condition of the vehicle, its maintenance history, what it needs today and what it's likely to need tomorrow matter a lot more.

The first mistake people make is comparing the repair bill only to the value of the vehicle. They'll tell me, “The car is only worth $6,000 and it needs a $3,000 repair, so it doesn't make sense to fix it.” Maybe, but that's not necessarily true. If spending $3,000 gives you another two years of dependable transportation, and replacing the vehicle means taking on a $600 or $700 monthly payment plus higher insurance, fixing the old car may be the smartest financial move you can make.

The question I would ask is not simply, “Is this repair worth more than the car?” Instead, ask, “What will this repair buy me?”

If your otherwise dependable vehicle needs a $2,500 transmission repair and your trusted technician believes the engine, suspension, air conditioning and other major components are in good condition, that repair could be money well spent. If the same vehicle needs a transmission, is burning oil, has a failing air conditioner, worn suspension components and four tires that are almost finished, the $2,500 transmission isn't really a $2,500 decision anymore. It's just the first bill in what could become a very expensive year.

That's when I start looking at the pattern instead of the individual repair.

Every older vehicle eventually reaches a point where repairs stop being occasional and start becoming a routine part of your life. Maybe it was $900 three months ago, $1,400 last month and now you're staring at another $2,000 estimate. Individually, you may be able to justify each repair. Collectively, the vehicle may be telling you something: it's time.

This is also where people fall into what economists call the “sunk-cost fallacy.” You've already put $4,000 into the vehicle, so you convince yourself you have to spend another $2,000 because otherwise the first $4,000 was wasted. That's not how you should look at it. The money you've already spent is gone whether you repair the car again or trade it tomorrow. Your decision should be based on what makes sense from this point forward.

I also want people to distinguish between repairs and maintenance. If your 100,000-mile vehicle suddenly needs tires, brakes, spark plugs and a scheduled fluid service, don't automatically decide it's falling apart. Those are normal ownership expenses, and a newer vehicle will eventually need them, too. On the other hand, repeated electrical problems, major oil consumption, transmission trouble, chronic overheating, serious rust or one expensive component failing after another can indicate that you're entering a different stage of the vehicle's life.

Another question I ask is how much you depend on the vehicle. Someone who works from home, owns another vehicle and drives 5,000 miles a year can tolerate an older car that occasionally needs attention. Someone who drives 25,000 miles a year for work, travels alone at night or has to be somewhere at a specific time every morning has a very different situation. Reliability has a value, even though you won't find it listed in Kelley Blue Book.

Think about the consequences of a breakdown, too. If your car doesn't start tomorrow morning, is it an inconvenience or a crisis? Can you borrow another vehicle, take a rideshare or work from home, or does your livelihood depend on that vehicle starting every single day? I've advised people to replace perfectly functional older cars because their personal situation made reliability more important than squeezing another 20,000 miles out of them.

Safety deserves consideration as well. An older vehicle that is mechanically sound isn't suddenly unsafe because the odometer crossed some arbitrary number, but vehicle safety has advanced tremendously. Automatic emergency braking, blind-spot monitoring, improved crash structures, better airbags, stability-control systems and newer driver-assistance technologies can provide protections that an older vehicle simply doesn't have. I wouldn't tell someone to take on a payment they can't afford just to get newer safety technology, but it belongs in the conversation when you're deciding whether to keep a 15- or 20-year-old vehicle.

Rust can change the equation completely, particularly in parts of the country where road salt is common. Cosmetic rust is one thing; structural corrosion affecting the frame, subframes, suspension mounting points, brake lines or other critical areas is something else entirely. There comes a point when you aren't deciding whether an old vehicle is economically worth repairing—you are deciding whether it can continue to be safely repaired at all.

Before making the decision, get an honest assessment from a technician you trust. Don't just ask what needs fixing today. Ask, “If this were your car, what do you think I'm going to be facing over the next 12 months?” A good technician who knows the vehicle's history may see things you don't. He or she may tell you the car is fundamentally solid and worth repairing, or point out three more major expenses waiting around the corner.

There is another side to this decision that people sometimes overlook: don't wait until your vehicle is completely dead before deciding to replace it. A running, driving vehicle with some remaining value gives you choices. A vehicle sitting at a repair shop with a blown engine or transmission gives you considerably fewer. If you know you're approaching the end, replacing it while it's still running well can make the transition easier and may preserve more of its trade-in value.

I also don't believe there is a magic mileage at which you should automatically trade. I've had people ask me whether they should get rid of a perfectly good vehicle because it just crossed 100,000 miles. My answer is usually: Why? If it's paid for, properly maintained, reliable and doing everything you need it to do, congratulations. Keep driving it. The least expensive car you'll ever own is often the one sitting in your driveway that's already paid for.

But don't become emotionally attached to keeping it alive just because you've owned it for a long time or because you've already spent money repairing it. At some point, every vehicle reaches the place where keeping it no longer makes financial or practical sense.

So when someone asks me, “Jerry, should I spend $3,500 fixing my old car?” I can't answer based on the $3,500 alone. I want to know what the vehicle is worth, its condition, its maintenance history, what has already been repaired, what else is likely to fail, how many miles you drive, how important reliability is to you and what replacing it would cost.

Sometimes the smartest thing you can do is write the repair check and keep driving.

Sometimes the smartest thing you can do is stop writing repair checks.

The trick is recognizing when you've reached that point—and making the decision before your car makes it for you.