Dear Driving for Dollars,
I own a 10-year-old car outright. I have no debt except for my home and some money in savings. My job future is shaky, and I may be laid off within the next six months. My car is starting to need expensive repairs, and I’ve spent a lot of money these last few months on it while putting a few repairs on hold. Should I replace my car with a newer, used car (which would use up all my savings), or should I just keep pouring money into my old car?
Take some time to talk to your mechanic. If he’s good, he is a wealth of knowledge about your specific car as well as what is typical for your car model for its age and mileage.
He can tell you if the repairs you’ve been experiencing are normal or not, and he should be able to give you a basic idea of the costs of upcoming maintenance as well as potential repairs you are likely to face in the near future.
Look at the costs of those repairs, and compare them to what you will spend on a newer, used car. Chances are a newer, used car will still be more expensive than repairing your old car.
Also, keep in mind your car insurance on a newer car will likely be higher. If you decide to keep your car, start putting some money aside for repairs and maintenance based on the feedback you get from your mechanic. If you decide to buy something else, weigh carefully the financial impact of depleting your savings or getting a car loan when you are in danger of losing your job.
Ask the adviser