Buying A Car...
The Time To Trade Old Wheels For New
When monthly repairs cost more than a car payment, consider a new car
It's a no-brainer: Counting
the upfront costs, monthly payments and depreciation, a new vehicle is more
expensive to own than an older, paid-for model.
But money isn't the only factor in deciding when to trade in the old jalopy:
Dependability, safety and common sense may trump dollars and cents. Knowing you
can reach your destination safely and on time may make a new vehicle a better
bet than rolling the dice on a high-mileage beater.
And even when dependability isn't an issue, a lot of people can't resist the
lure of shiny new metal, especially when rebates and low-cost financing add to
the attraction.
Because everyone's finances are unique, there is no formula that says when it's
best to buy a new or newer vehicle. But Phil Reed, consumer advice editor for
automotive Web site Edmunds.com, gives this rule of thumb: "If you had a used
car and repairs were less than a monthly payment on a new car would be, stick
with the used car. You'll still be ahead."
However, Reed says the decision should not be entirely financial. "Reliability's
also an issue," he said. "The worst thing you want is for your car to die on the
expressway in the middle of the night. You have to think about a new car if
problems look chronic." Annoying mechanical breakdowns are bad enough, but
safety-related failures, such as the brakes going out or losing power steering,
can be worse. Reed says a car 10 or more years old also won't have recent safety
advances, such as side air bags that protect occupants in collisions.
Ultimately, the owner has to decide whether it's worth it to sink more money
into a car that's disabled or limping along or sell it as is, which may be as
scrap metal to a junkyard.
Auto insurers make those judgments when assessing the cost of repairs after
accidents. State Farm starts thinking about a total loss when damages approach
75 percent of a vehicle's value, but the threshold should be lower for
mechanical repairs.
Even if Old Faithful has chugged along for 10 years without major mechanical
failures, the automatic transmission could stop shifting gears tomorrow, putting
the owner between a rock and a hard place.
A car that doesn't run has hardly any value, but spending $2,000 to fix a
transmission will not inflate the resale value by the same amount.
Reed says an owner may recoup part of the repair cost in a private sale by
showing proof that the transmission was just rebuilt. He doubts it would raise
the car's value in the eyes of a used-car appraiser at a dealership and could
raise a red flag.
"It may work against you," he said. "Mechanics will tell you that once the
sanctity of the union between the engine or transmission and the car is broken,
the car may never be the same."
- Rick Popely, Chicago Tribune, Newsday,
Sunday, October 24, 2004
This page was last updated on
03/28/05
.
