You have a (mostly) free ride
Even with the occasionally steep repair bill, you're usually better off keeping an older vehicle if it's paid off, says Exsterstein.
"You can beat the note," he says.
Still, you have to factor in cost. If you're paying $300 to $400 per month on repairs on a car that's paid off, you're shelling out about as much as you would for a car loan payment.
It also depends on the type of car you drive. Of the cars Exsterstein sees, European imports tend to be the most expensive to maintain, costing two to three times as much to replace certain parts and fluids as their Japanese- and American-made counterparts.
And some cars are simply built better than others. Japanese-branded sedans and compact cars tend to be more reliable and are generally the least expensive to fix, Exsterstein says. "If it's a (Honda) Civic or (Toyota) Corolla with 100,000 miles or so, I'd say keep it. But if it's a Dodge Neon, I'd say get rid of it because it's going to cost a lot more to fix when it breaks down," he says.