Originally Posted By: brianl703
If you have a car that needs $300 worth of work, are you ahead (over buying a new car) if the repairs make the car last 6 more months?
$300 is not even a single monthly payment on most any new car worth buying.
As long as all the major systems are still functioning, it would be worth spending $1000 on a car that's only worth $1000 -- if, in this case, it keeps the car running at least six more months without other major repairs.
I recently advised a family member to perform the following maintenance on a '96 Dodge Stratus with 100k miles, a car that was purchased new:
1) timing belt,
2) AT fluid flush
3) front brake job,
4) tie-rod end, right side
Total cost was over $900, car has a Blue Book value of around $2000. My argument was that, while a new car might be nice to own, her current car has a lot more life left in it. And that most any new car she buys will cost her several thousand dollars in depreciation over the next year or two, while the Stratus is already fully depreciated.
Originally Posted By: Dyoel182
Originally Posted By: brianl703
Don't forget about the depreciation of the new car. That might exceed the cost of repairs to keep an older car running.
Depreciation is only a factor if you swap for a new car fairly soon. Its not like you magically lose more money after a year goes by.
Depreciation is the reason why you end up with a car worth $1000 or $2000, and you have to decide whether to fix it or replace it. You lose the value of an asset, meaning you are less wealthy. So it has the same effect on your net worth as if a thief stole that much money from you.
Just because you tell yourself that you do not intend to sell or trade in that vehicle, does not mean it is still worth what you paid for it. It has lost value, and you have lost value.
