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What’s best: Repair your old car or buy new?

Man and woman looking at clipboard in car repair shop
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Your car requires regular investments to keep it running. At some point, however, you will question whether it’s wise to put more money into an old set of wheels. Should you pay for a major fix, or put that cash toward a new vehicle? To determine the answer, find out how much the repair will cost, how much your car is worth and how much you’re going to need to spend to drive off the lot with a replacement. 

Benefits of repair vs. replacement 

Fixing a car or finding a new one both come with big financial implications. As you crunch the numbers of a repair bill or a new auto loan, consider the major perks of either move. 

Benefits of repairing your car 

  • You can avoid paying record-high prices. Buying a new car is no fun for your bank account. At the end of 2021, the average price of a new car topped $47,000, according to data from Kelley Blue Book. Matt Degen, editor at Kelley Blue Book, suggests that it may be wise to hold off on buying a new car if the repair is only a couple hundred dollars. “With the prices of new cars right now, you’re looking at a monthly payment of $600 or $700.” 
  • You’ll have one bill instead of a new set of monthly responsibilities. If you can cover the repair and avoid getting locked into a new auto loan, you can keep your monthly budget in good shape. “Even if you had a high repair bill of a few thousand dollars, that would only be enough for a down payment on a new car,” says Ronald Montoya, senior consumer advice editor at Edmunds. “Then, you’d still have to contend with the monthly payments for another five to six years or so.” 
  • You can keep your insurance costs in check. Since a used car tends to be cheaper to replace, an insurance policy for your old car will likely be more affordable than covering a brand new one. 

Benefits of replacing your car 

  • You can stop worrying about every noise your old car makes. The obvious benefit of a new car is the ability to sleep at night without worrying about dealing with another repair next week. New cars come with warranties that usually cover issues for the first three years or 36,000 miles, and some parts of the vehicle may have extended coverage up to 100,000 miles. 
  • You might be able to save in other areas. There are some issues that can’t be repaired such as your car’s gas mileage — something to keep in mind in a time when the price of a gallon of gas is hitting $5 in some markets. “If you’re driving something that is draining your wallet,” Degen says, “it might be time to consider a hybrid or electric model.” 

How to tell if it’s time to replace your car 

In some cases, there isn’t much debate over replacing versus repairing. If any of these signals apply to your situation, it’s probably time to look for a new vehicle. 

The numbers don’t add up  

“If you have a car worth $5,000 and you’re looking at a repair for $4,000, it’s probably time to start looking for a new car,” Degen says. For a car that you still owe a balance on, you may want to look into selling it before you end up upside down on the loan. 

The issues are causing major headaches in your daily life 

Montoya points out that if the car’s issues are creating hiccups in your routine — making your kids late to school or you late to work — you probably need to consider a replacement. This is especially true when said hiccups end up causing financial strain. 

You have a serious safety concern 

If the car can’t pass a state smog inspection test, you’re going to need to address a major issue. And if the car presents any kind of danger, start browsing. 

“You can’t put a price tag on safety,” says Degen. “If your car presents a threat to you or other drivers, it’s time for a new one.” 

3 tips to make your car last longer 

Are you trying to squeeze some extra life out of your current car? Rather than rush to the dealer to buy a new one, there are a few simple steps to follow to feel good when you start up your current engine. 

  1. Follow the regular service schedule. Think of your car the same way you think of your body — it helps to get regular checkups to identify potential issues before they become huge problems. Do the same with your car. Get the oil changed, replace the air filters and flush the fluids.  
  2. Pay attention to alerts. Sure, that check engine light might seem like an annoyance, but it’s trying to tell you something. When your car’s system issues a warning, don’t delay — go get it checked out by an expert. 
  3. Give it a new shine. Cosmetic clean-up can do a lot. Degen points out that paying for a good detail of your old car can make a significant difference. “It really does something for you psychologically,” he says. “Just getting into a car that looks clean and smells clean can make you think twice about the immediate need for a new one.” 

Bottom line 

A car can’t last forever. If you’ve exhausted every repair to keep it running, you might be ready to start shopping. Before you do, there is some good news: You might be able to get a good chunk of cash to help cover part of your replacement.  

“Even older used cars with higher mileage are still getting record trade-in value,” Degen says. “So, that old jalopy that you have might be worth a lot more than you think it is.” 

Take a look at your car’s current value and compare it with an estimate for the repair bill. Seeing those two numbers next to each other should give you a good idea whether you should repair or replace it. 


Written by
David McMillin
Contributing writer
David McMillin is a contributing writer for Bankrate and covers topics like credit cards, mortgages, banking, taxes and travel. David's goal is to help readers figure out how to save more and stress less.
Edited by
Auto loans editor