We regularly discuss whether a client should fix or replace their vehicle. Many of these clients mention its value per Kelly Blue Book (KBB) or Edmunds when making this decision. While market value comes into play when looking to buy a vehicle, it doesn’t really account for much when looking at whether keeping the vehicle and repairing it makes more financial sense.
One example is my car–I drove a 2002 Pontiac Grand Am with 200k miles on it. I was trying to figure out if it was worth repairing while I saved up to buy a newer vehicle. I was getting to the point where I didn’t know what repairs were coming up, the chance of breaking down on the side of the road, and what could put me or my passengers at risk in the case of an accident. Being an older vehicle, and my first car, I hadn’t done much past doing emergent repairs and oil changes since I didn’t know better, so I had Andrew inspect it.
The findings were absolutely shocking; the vehicle had many leaks, blown struts, overdue maintenance, and the frame had rust rot. After doing some estimating, I found that in order to put my car in a good place mechanically (excluding all needed body work), I was looking at repair costs of up to $11,500!
Rust underneath a vehicle is common in northern areas. The salt used to melt snow and ice eats away at the metal.
This vehicle was from Kansas.
The rust on this vehicle was evident around the whole bottom frame.
This information made it apparent that I could get a vehicle in better condition for at or under the cost of repairing my current vehicle. While I already thought about replacing my Grand Am, I needed to accelerate the timeline for my safety and the safety of others. I did some shopping and I found a 2015 Corolla with the features I was looking for, and it was in better condition than the Grand Am and less than the Grand Am’s repair costs. Andrew inspected the Corolla so that I had a baseline of the car’s current and upcoming needs. I feel so much better about owning the Corolla rather than the Grand Am. It is safer, in better mechanical condition, and maintaining it will be less costly.
Goodbye 2002 Pontiac Grand AM
Hello 2015 Toyota Corolla
The ‘02 Pontiac had a $300 market value in its current condition. Had it been in good shape, it may have had higher market value, but it would have been unlikely that I could have gotten something in equal or better condition for the cost of repairs. For example, if it had only needed struts or a fluid service, I couldn’t have gotten a vehicle in good condition that I didn’t need to fix up for that same cost. If a vehicle isn’t kept up with, and things are left too long, then its needs and their costs can go up exponentially.
Knowing what your vehicle needs and how to plan for them can help keep your ownership costs low. Had I known everything about my Grand Am earlier I might have been able to drive it for another 10 years by proactively taking care of problems before they left me stranded. If you have a broken vehicle, one thing to think about is “for the same cost as repairs, can I get a vehicle in better condition with less needs?”
We often advise clients to budget about $150 per month for maintenance and repairs (this can vary depending on its current condition): that’s only $1800 a year, $3600 in two years, and $5400 in three years. So if all that has been done is oil changes and occasional rotations, it isn’t surprising that after a few years a vehicle may be in the shop for repairs costing thousands of dollars. Some people are surprised to find out that many vehicles are capable of reaching 300k miles and beyond. For example, Andrew and Bethany have a 1994 Toyota Corolla that they are nowhere near replacing.
One of the things we do is help our clients make informed decisions about their vehicles. We don’t want someone to put a lot of money into something that isn’t going to serve them well. Everyone’s budget is different, and a good auto repair shop will help their clients plan long term according to their budget.