Cars: Repair or Replace?

There comes a point in every car owner’s life where they have to start making some hard decisions about whether to repair their vehicle, or replace it. And that question gets more complicated when the car’s useful-to-you life is already shortened by a PCS move (especially overseas) or the arrival of a new family member that makes the car unsuitable .

I am at that decision point right now. My beloved 2004 Prius is in the shop being evaluated for some possibly major repairs. (No, not the hybrid battery.)  I want to calculate the point at which I am willing to repair the car before the shop calls me with an estimate, so that I am making a completely rational decision and not being swayed by emotion, convenience, or any other factors.  There are multiple options available, but I’m basically considering whether we should repair the car or not repair the car.

But how am I going to calculate this?

First, you have to know that we are leaving this wrong-side-drive country in 7 or so months, and so this car is not going back with us regardless of how much I never-want-to-have-another-car-again-ever.  Second, we have an “extra” car, because my sweetie doesn’t hold our family of six.  So not fixing this car doesn’t mean that I won’t have a car, it just means that I won’t have a fuel-efficient, easy-to-park, right-side-of-the-road car.  Of course, we could always consider picking up a lemon-lot special to tide us over.  Details, details.  There is a saying, “the devil is in the details,” and I’m pretty sure it applies to this situation.  If you are trying to consider the same question, you probably have some details that are specific to you.  Maybe you’re planning to have another child, or maybe you can get reimbursed for expensive car registration, or maybe there’s some other issue.  That’s fine, just be sure to figure out how to account for them.

(I am dreading writing this post, because I am calculating as I go, and I’m pretty sure I know the outcome.  Tears.)

So, hypothetically speaking, if I fix the car, I will be selling it next July-ish.  I used two different online valuation services to come up with a possible expected selling price of around $2,500.  Unfortunately, that price assumes that the car is in generally good condition, which my car is not.  Both sides have significant cosmetic damage (not all my fault!), for which the repair estimates already exceed the estimated value.  The interior is worn the way you’d expect if you’d been hauling four kids for 178,000 miles.  Cringe.  Basically, the car has zero value right now.

Gosh, it’s not looking good already.  However, the great gas mileage is a compensating factor.  I drive about 400 miles per week.  My precious gets between 50-55 miles to the gallon, and her replacement gets about 17 miles to the gallon.  Some quick math tells me that giving up Stella will cost me an extra $60 per week in fuel, assuming that prices stay relatively the same at the $4.00 per gallon we’re currently paying.

Seven months times $60 a week means that driving the other car is going to cost $1600 (approximately) in extra fuel before we leave.  So, in theory, any repairs less than $1600 will still save me money.  Right?  Oh, except I haven’t factored insurance yet.

Even with the multi-car discounts and such, we’re in an expensive insurance country.  We’re paying about $30 per month per car, so having a third car is definitely a luxury.  $30 times 7 months is $210 in extra costs, meaning my actual “value” for the happy-happy-joy-joy car is $1390.

(Much better than I expected.  But I still don’t really want to spend the money.  At least I know where my break-even point lies.)

Lastly, there is the car shipping/not having a car problem.  We are pretty dependent on having two cars…my husband works crazy hours and my kids need to be places all. the. time.  If we have three cars, we plan to ship the third, American car far ahead of our actual PCS so that it is available as soon as we land.  If we have only two cars, then we will be car-short at one end or the other.  This might mean rental costs, which can add up quickly.  How do I quantify these what-ifs?

Things we can’t predict include whether any of the cars would need more work between now and moving time.  This is potentially a big deal, from the repair expense perspective and also from the inconvenience perspective.  With two car heavy schedules, having older cars has been balanced by having a spare car.  If we only have two cars, and one needs service, we’ll be juggling and possibly renting a car.  So unpredictable!

Please let me know if you see an flaws in my logic, or my math.  I expect to hear from the repair shop tomorrow, and I want to be prepared to make a decision.

Have you approached the repair or replace decision in this way?  Has it worked out the way you expected?  I’m curious, and you can help others if you share your experience.

 

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.