Repair or Replace Your Car? Dave Ramsey Says To Consider These 5 Things
Your car is making that noise again. You know the one — the one that makes you turn up the radio and pretend you didn't hear it. Eventually you can't ignore it anymore, and you're stuck staring down a decision that trips up even the savviest drivers: Fix it or ditch it?
The math isn't as simple as "repair cost vs. car value." Between sky-high new car prices, a used market that's still catching its breath, and repair bills that can swing from "annoying" to "why did I even bother," it's easy to make the wrong call if you're only looking at one number. Dave Ramsey said there are five things worth weighing before you hand over your keys (or your credit card) to the mechanic.
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1. The Cost of the Repair vs. the Vehicle’s Value
Ramsey’s general rule is to lean toward replacing the car if the repairs cost more than its value. To help with the decision, Ramsey said to use sites like Kelley Blue Book to find out the car’s value both with and without the repairs. If the repairs are going to cost more than the vehicle’s worth or if repairing it doesn’t increase the value much, you may be better off selling it and looking for another car. But if you don’t have enough cash to buy your next vehicle, then you may need to pay for the repairs and continue saving.
2. A Temporary Fix or a Permanent Repair
A second factor to consider is whether the repairs will be temporary or more permanent. Ramsey’s example is a new transmission. This is a more permanent repair compared to others that may just be a bandaid on a larger issue. Permanent fixes may be worth the investment to keep the car going for longer, especially if you’re working toward becoming debt-free.
3. Frequency of Repairs
Even if there’s a permanent fix for the current issue, more repairs may be on the horizon. If you find yourself in the mechanics shop, spending $500 for each repair, it can add up quickly. Ramsey recommended finding out what repairs are normal for your vehicle and checking out some online car forums to see how long your vehicle typically lasts and whether other owners think the repairs are worth it. But if the mechanic starts to feel like a second home, it’s likely time to look into a replacement vehicle.
4. Safety of Your Vehicle
Safety is the top concern when you’re driving around in your vehicle, so determine whether the car’s issues actually make it unsafe to drive. Issues like faulty transmissions, bad brakes, steering problems and busted taillights, according to Ramsey (and your mechanic), need to be fixed immediately because they pose safety risks to you and other drivers. Cosmetic repairs, while nice, don’t make the vehicle any safer, and you can hold off on them until you have more money saved up to pay for them — or just deal with a few dents and save your money toward a new car or throw it at your debt.
5. The Current Car Market
If cars are readily available and prices are reasonable, then replacing your car is a real possibility. If the market is tighter, however, with low inventory and high prices, you may need to hold off on replacing the car and just repair it until the market is better.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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