Not sure whether it makes better financial sense to repair or replace your car? A mechanic shares the four steps to determine if your car is too expensive to repair.

As a mechanic, I’ve noticed it seems some people have a “problem” with a $400 a month new car payment, but they are perfectly comfortable paying the same, if not more, on monthly repair bills and accept the inconveniences that come with them.

I don’t know what “drives” people to a high mileage goal. I hear customers comment, “This car has to go another 20,000 miles,” or brag about how many miles they are determined to put on their vehicles. “I am going to drive this vehicle 180,000 miles whether it likes it or not”.

Now, if this is a challenge for you, go ahead and take it, but I can think of many other challenges less costly. Granted, some cars will last a long time and do so with relatively low maintenance costs, but this is not the norm.

How does one know when to throw in the shop rag and get a new car? Well, I don’t have a crystal ball bearing, but I can provide some helpful guidelines to assist you in your evaluation process.

1. Evaluate your car.

Perform an evaluation of your vehicle yourself using this used car checklist from Popular Mechanics. The checklist is self-explaining and easy to use.

If you have a concern or a potential problem you might uncover with an item on the list, have your mechanic inspect it during the next step.

2. Determine what future maintenance costs will or could be.

For most cars, you can go online and find a maintenance schedule for your make and model to help you forecast costly maintenance items. Print out the maintenance schedules that are closest to your current mileage and the next higher mileage schedule.

Take your car to the mechanic (hopefully the mechanic that you regularly visit and have a good relationship with) and pay them to inspect all the items on the two schedules. The cost of these inspections should be fairly inexpensive, and the information they will provide will be more than worth the expense.

Add up all recommended repair costs plus all previous repairs during the year. Divide this number by 12 to determine your average repair cost for the given year. This number will not however include any breakdown or unexpected repairs.

3. Determine how much your car is worth.

How much is your car worth? Trading in your vehicle for a new car is the easiest but will not bring in the most money for you. The new car dealer will pay you a wholesale price for your car, and in doing this, you are leaving money on the table.

Selling your vehicle to an individual at a retail price will require a little more work on the seller’s part, but there can be greater financial gain in doing so. Autotrader.com can provide you with similar “comparable” vehicles like yours so you can get a feel for the market in your area.

I recommend going to see and test drive your competition before you set a price on your car. Take along the used car checklist and evaluate the competition just as you did your car. How does your car compare? Could you place a higher price on your car after your evaluation, or is your competition in better shape?

Another helpful site is KellyBlueBook.com, where you can obtain loan, trade-in, and retail values for comparable vehicles. This book is commonly used as the standard in vehicle base values, but you can always add or subtract from that number things like overall appearance, well-kept maintenance records, upgrades (stereo equipment, tires and wheels, bug shields, etc.) and customer added items.

4. Determine the cost of buying another car.

How much will your next car cost, and how will you pay for it? Now that you have determined your yearly repair costs, the value of your current vehicle, and a possible sales price, you must calculate the monthly payment for the new car. Paying a larger down payment on the new car will lower the monthly payment. How much of the sale of your current car can you use as a down payment on the new car?

When buying the new car, be sure to take advantage of rebate incentives and low or zero interest on certain models the factory is trying to move out. Keep in mind you are replacing a vehicle that you know will be incurring future repair costs, so don’t take on more money debt than you can handle. Hopefully, you have a month or two before these expected repair bills will be required, so you will have some time to price shop the new car and have time to sell your current vehicle.

Related: 7 Keys to a Good Car Deal

Some things to consider: In my opinion, I would replace your current vehicle if your average yearly repair bills are more than 10% of the price of the new car you would like.

These four steps are just a guide to help you remove the emotion tied to selling your current car and buying the new one. After doing these steps, you might find that you are not in the “money pit”, and the maintenance schedules and checklist will have given you an easy way to forecast and plan for upcoming repair expenses.

• Bargaining for the Best Deal on a New Car
• 8 Things To Do Before Trading in Your Car To Save Time and Money
• 13 Questions To Determine If Your Car Is Worth Repairing

Reviewed December 2023

About the Author

For over 70 years Austin Davis’ family has built a reputation in the auto repair business for being honest, dependable, and for serving customers at a fair price.