The average age of a car in America reached an all-time high this year of 10.8 years, according to a study by Polk, an automotive information and marketing firm. That means a lot of us will be facing needed repairs.
Let's look at these questions to ask yourself before you decide whether your car is worth keeping:
What does the research show? Many times you can diagnose a car problem online. Knowing what caused a leak or squeal without having to consult a mechanic can save money and give you a good idea of how much it will cost to fix.
How much will the repair really cost? Don't go on a gut feeling—either take your vehicle to a mechanic or call and describe the symptoms and ask for a high/low range for cost to repair.
How long will the repair extend the life of your vehicle? If one repair will add years to your car's life, it may make sense to do it. On the other hand, if this repair is just one of many you predict to come, it probably makes more sense to trade in your vehicle and purchase a new one.
What is your car worth if it's repaired? Kelley Blue Book can provide a rough estimate of your car’s worth, based on figures such as mileage (http://www.kbb.com/whats-my-car-worth/).
What is your car worth if it's not repaired? You may have an opportunity to sell your car to someone who can do the repair for less than you'd spend—or you may have to sell it for scrap value. In any case, find out what it's worth as-is.
Have you replaced other major components? If you've recently repaired a major part (e.g., the transmission), that's one less major bill in the near future. It could be that the major components are newer—and more reliable—than your car's age.
How important is a dependable vehicle? Your job or family situation may require a reliable car, or you may be more flexible to deal with a stubborn vehicle.
What would your new car payments be? That new ride could cost you $300 or more per month for the next 3, 4 or 5 years. If you're struggling to pay for the repair, how will you make the monthly payments?
Will the repair cost more than the car is worth? In most cases, it doesn't make sense to spend $3,000 to repair a car with a book value of $2,000.
Only after considering these questions should you decide to invest big bucks in an auto repair or decide to swap it for a newer ride.
Gary Foreman is a former financial planner who founded The Dollar Stretcher.com website and newsletters. The site features thousands of articles on how to save your valuable time and money including an article on repairing or replacing my car.