6.23.21

Should I Fix My Car or Buy a New One?

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Person looking under the hood of a broken down car on the side of a road next to a corn field.
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If it’s time to hit the highway in a new set of wheels, a new or used auto loan from Consumers can help you reach your destination! We’ve got some of the best auto loan rates and affordable payment options across Lower Michigan.

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How to decide if it’s worth it to make major repairs to your car.

Whether your car was in an accident or it’s been making some troublesome sounds, if your vehicle is in need of repair you could face a big decision: fix it or buy a new one. There’s no magic formula for making the call, but the following tips can help you decide if it’s worth it to fix the vehicle. 

Is it worth it to repair the car?
Some cars are absolutely worth making a major repair. Others, not so much. Asking yourself these simple questions can help you determine the best path forward:

  • Will the repair cost more than half the value of the vehicle?
  • Has the car been well-maintained and otherwise trouble-free?
  • Is the car frequently in need of repairs?
  • What’s the expected lifetime mileage for similar cars?
  • Does owning this vehicle stress me out?
  • Realistically, what can my budget handle?

There’s a saying that the devil you know is better than the one you don’t. If you can’t afford a new car and a replacement would be a used car, you might end up trading one set of problems for another.

Also, the emotional component of owning the car can’t be overlooked. If the car was a gift or holds sentimental value, you may decide the fix is worthwhile. If the unreliability of the car fills you with dread each time you drive it, you’ll probably feel more confident with a new car.

Run the numbers
If the car has been relatively trouble-free, it might make more sense to make the repair. A good way to run the numbers is to ask: how many more months will the repair keep the car on the road? Then compare this number to the cost of a new car.

For example, let’s consider a $3,000 fix that would keep the vehicle on the road for another two years. $3,000 divided by 24 equals $125 per month. Investing in the repair might be a better alternative than spending $500 each month on a new car.

Opting for repair over replacement also provides an opportunity to save for your next car. If the $375 saved in the example above is set aside each month, in two years the total savings will be $9,000. If you buy a $30,000 car (not including taxes and fees) and finance just $21,000 with an auto loan at 7% for 60 months, monthly payments will be $415.83. Financing the whole $30K would require a $594.04 payment each month.

You opt to repair but don’t have cash on-hand
If you don’t have enough cash in your emergency fund to cover repairs, one option is to put the repair bill on a credit card. However, you could also finance the bill with lower interest by using a personal loan or home equity line of credit.

If you decide to sell
Be upfront about the car’s condition with prospective buyers. Share the estimate for repairs and be willing to reduce the price of the car by that amount.

Consumers provides banking services for more than 110,000 members. If you have banking questions, call us at 800-991-2221. We make it easy to bank how you want, when you want.

Federally insured by NCUA

Consumers auto loans

If it’s time to hit the highway in a new set of wheels, a new or used auto loan from Consumers can help you reach your destination! We’ve got some of the best auto loan rates and affordable payment options across Lower Michigan.

Learn more

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