When Is a Car Used Up?

[livingdeb]

I like to use up my cars before I sell them. However, it's not that easy to tell when they are used up.

After my first car had been through quite a few repairs, I found an article that listed all the things that typically go wrong with that make and model. By that time, I had already replaced most of those things. So I decided it might be a whole different car, a reliable car.

But no.

I decided to sell that car the fourth time that my mechanic explained that it would cost all my savings to fix it. Then I went without a car for four years.

My second car I sold after a collision had made it so that I could no longer open the trunk, and then the engine started smoking and the brakes started feeling very different. Too many things.

Some people say that when it costs more to repair your car than your car is worth, then it's time to buy a new car. I think that's a little odd. I'd definitely agree that if it costs more to repair your car than it would cost to buy a new car, then it's time to buy a new car. You never hear that, though, because then people would never get to buy a new car, and people like to buy new cars.

It probably makes more sense to compare annual costs of your current car and your next car. Let's say your current car is 20 years old, and you bought it ten years ago for $3000. That makes the annual cost for buying it $300. Add to that the costs for insurance, gas, etc. Then add the annual cost for repairs.

If you keep the car for another year, it would cost only $272 per year instead of $300 to purchase it, but your repair bills are likely to go up.

So, once those costs exceed annual costs on whatever car you would be buying next, that's when it's time to sell.

Except, of course, that repair bills clump. You may need two repairs in one year, then nothing for the next three years.

I remarked in an earlier entry that this time I will start looking for my next car after I've owned my current car for ten years, even if it is not used up. This is because waiting for the car to be used up makes it harder to be properly picky when buying the following car.

Another idea is to wait until I have twice as much saved as I need (I contribute $50/month toward my car-buying fund), and then start looking. Then even if I buy a lemon and regret what I have done, I have enough money already to just buy another one. Assuming my next car will cost $4000, that will take about the same amount of time as waiting the ten years.

So, how do you decide when to trade up?

Comments

[llcoolvad.livejournal.com]

Good question, and one I think about a lot. I don't have a great answer, as out of the four cars I've owned I only got rid of one by natural causes. Two others died violent horrible smashing deaths, and the fourth I still have. I didn't own my first car/get my license until 1990 (although I was 26 by then!). I like your idea to separate cost to buy from maintenance and repairs, so:

• Car 1 (1990-1992): 1979 VW Rabbit, bought for $400, many many repairs, later smashed to bits (my fault; hello ice, hello guardrail!)
  
• Car 2 (1992-1996): 1980 VW Rabbit, Dad gave me because he had an extra and I smashed up Car 1. Electrical nightmare problems. Thanks Dad! Many alternators and several years later sold it for $150. Ha! (the person I sold it to knew what they were getting, trust me)
  
• Car 3 (1996-1997): 1985 Nissan Sentra, bought for $1,600. Had for 1 year -- some bimbo slammed into it and killed it. Got $1,100 from insurance, and $400 as a trade-in. Yay! But sad, as I loved that car.
  
• Car 4 (1997-present): 1996 Honda Civic. Had no car savings since only had previous car 1 year. Bought from dealership with payments (ugh). Still have car, 115K on it. No thoughts toward getting rid of it. Had one major repair (head gasket) so far, Mom gave repair to me as a birthday present. Other routine maintenance, also brakes, new tires, etc. I'd have to look up how much I spent on it so far, but it was $10,000 to buy, made payments for five years so there'd be probably $4,000-ish in interest. I've had it for nine years, so that's $1,600 per year cost for buying so far.

So from 1990-1997 my cost for buying was $350, making it $50 per year (a negligible amount), but of course then had to include endless repairs of $200-$250 at a time. I would guess back with the first couple of cars then I'd have a repair possibly every four months (or even more often), sadly enough.

My new annual cost to buy of $1,600 seems high, but I've put very few repairs into it in total. If you factor in that I don't have the inconvenience of not having a car at all or the inconvenience of not having it for a day or two while it's getting repaired, that I generally don't have any unexpected expenses, and the general peace of mind that when I put the key in the ignition it will most likely start, I am fairly content with my current costs. It was a little hard to make the leap from $1,500 to $10,000 between Car 3 and Car 4, but it seemed like the only choice I had at the time. The payments were reasonable, and I needed a car. I am hoping to get another couple of years out of this current car, that's for sure.

However, barring another accident I'm not sure when I'll make the decision to change cars. I might wait for the next large repair. I put $130 into it this week to fix the heating & A/C unit, which seems like a reasonable amount...but will I think the next repair will be reasonable? I don't know.

Good luck with your decision (that was a lot of wordage to get to that conclusion, wasn't it?)!

[livingdeb.livejournal.com]

Thanks for writing this totally awesome comment filled with oodles of information, good writing and wit!

I can't believe our last cars were almost exactly the same: ten-year-old mid-1980s Nissan Sentras that cost $1600. You have my great condolences on the loss of that car. Mine lasted me about ten years, and so far it's my favorite. (Of three, the other of which were a Ford Escort and a Honda Civic from the annoying-seatbelt era).

I once calculated that the cost of maintaining my last car was $100/month including gas, insurance, fees, and repairs. (I don't drive much, and I don't buy collision insurance. Because when your car is worth $800, it doesn't take much to "total" it.) Then I like to save $50/month for my next car, so that's a total cost of $150/month. Which is completely unbelievable! So I'm never buying a new or even newish car again. So long as other people remain afraid of ten-year-old cars, they'll stay nice and cheap for me.

Now that I get reliable cars, instead of Ford Escorts from Hertz Buy-a-Car, I also get that nice peace of mind. Also, I take a bus to work, so if I do need to bring my car to the shop, it's not some sort of horrifying emergency.

I think your annual cost of buying (so far) is actually quite good, probably 1/3 - 1/2 of what most people in the U.S. pay. You got an affordable car and have held on to it for a long time.

I wouldn't be surprised if your current car lasted you five to ten more years. Unless there's some factor in Boston but not Austin that precludes that, like rust from salt on the roads. Good luck with that!