Should I Repair or Replace My Car?

So, your car broke down, and now you’re faced with a hefty repair bill. It’s a frustrating situation, especially if it’s becoming more of a routine than a one-time event. It’s natural to grow tired of getting nickel-and-dimed by your car to the tune of hundreds or even thousands of dollars’ worth of repairs. You may even consider selling the car for a newer and more reliable one. But is that a good choice?

Everyone’s situation is unique, so there’s no one-size-fits-all answer. However, here are some guidelines to help you determine whether you should repair your car or sell it.

Should I Repair or Replace My Car?

Usually, the cost of repair will be less expensive than purchasing a new car. According to Experian data from the first quarter of 2023, the average monthly payment for a new vehicle is $725, and $516 for a used vehicle. Despite the high prices of both new and used vehicles, it may make sense to purchase another vehicle in some scenarios.

Your car’s value may be the most important factor to consider as you make your decision. However, if the cost of repairs exceeds the value of your car, it may not make sense to repair it. The opposite is also true: If your car is worth $20,000 and the cost to fix it is relatively insignificant, say $800, you’re probably better off fixing your vehicle.

Similarly, deciding whether to sell your car or replace it could come down to the remaining life expectancy of your vehicle and the cost-benefit of repairing it. If you can significantly extend the life of your car at a reasonable cost, it may be worth repairing, and vice-versa.

Keep in mind, these considerations aren’t always plainly evident, and your attachment to your car can make it hard to make an objective decision.

When Is Repairing Your Car Worth It?

Here are some factors you might consider to help you determine the best course of action:

When repairs are substantially less than your car’s value:

If the cost of repairs is minor compared to your car’s value, repairing the car is probably your best bet. This is especially true if you own your car outright, and replacing your car would leave you on the hook for car payments, registration, taxes, and other hidden costs. Check value estimation sites like Kelley Blue Book and Edmunds to help you determine the value of your car. Additionally, your mechanic should be able to give you a rough value for your car once repairs are made to help inform your decision.

When the repair is for a discrete issue:

If a repair is isolated to a specific component, and the rest of the car is in good condition, fixing it could be worth it. For example, a one-off replacement of a defective alternator could be fairly straightforward and less expensive to fix than a motor or transmission issue that could involve several components.

When repairs will likely extend your car’s life:

Some repairs, like changing worn brake pads or a timing belt, are considered routine maintenance and may not be indicative of larger issues. Maintaining your car properly can help prolong your car’s life and delay the need to replace it.

When your car is reliable:

If your car rarely—or never—breaks down, that’s a good sign that once repairs are complete, it shouldn’t need additional work right away. If the cost of the repair is nominal and it can help you protect your car’s value, it’s probably a wise choice to proceed.

Remember, the parts on your car won’t last forever. For example, you’ll likely need a new radiator, alternator, and shocks before your car hits 150,000 miles. Check the maintenance schedule in your owner’s manual to ensure you replace parts before they break down on you. Doing so may extend your car’s life and save you money in the long run.

When Is a Car Not Worth Fixing?

Ready to throw in the towel on your car? Forgoing repairs may make sense in the following situations:

When the cost of repairs is higher than the car’s market value once repairs are complete:

Many cars depreciate 20% within one year and another 15% each year after that until the car is four or five years old. If the cost of the repair is close to or exceeds the value of the car, consider selling it.

When the vehicle will be unsafe even after repairs are complete:

If repairing your car won’t resolve safety issues with your vehicle, you shouldn’t put yourself and others in harm’s way. Consider selling the car to a junkyard or dealer. If you want to trade it in, be upfront about any necessary car repairs. The dealer can perform these repairs before reselling it.

When your car frequently breaks down or needs repairs:

If your car often needs repair, this might indicate a more serious underlying issue that will ultimately require extensive repairs. The cost of frequent repairs adds up quickly and should be considered against the cost of purchasing a newer and more dependable vehicle.

While it’s wise to consider the costs of repairing your vehicle versus the cost of replacing it, some factors can’t be quantified in dollars and cents. For example, purchasing a new car that isn’t likely to break down and leave you stranded may give you peace of mind that’s worth more than the cost savings of keeping a less reliable car.

Should I Repair My Car Before Selling It?

Maybe you’ve already decided to sell your vehicle. Should you repair it beforehand or sell it as is? Consider the following factors to help you chart the right path for you.

Will the Repair Increase Buyer Demand?

Some repairs can boost your car’s appeal and help facilitate a faster sale. For example, fixing the air conditioner is crucial if you live in a hotter climate and could boost your car’s value. Similarly, essential repairs like replacing worn tires can reassure buyers of your car’s reliability.

Will the Repair Boost Your Trade-In or Resale Value?

If you have a newer car, you probably won’t have major repairs to make, but it’s still essential to compare the repair costs with the trade-in value you’ll receive at a dealership. Remember, the dealer is likely to repair the car before reselling it at a cheaper cost than you’d pay. As such, making expensive repairs to your vehicle may have little bearing on your trade-in value. On the other hand, you might snag a higher sales price on the private market if your car is in good condition.

Are the Repair Costs Worth It?

Get estimates for any repairs your vehicle needs and weigh the cost against the potential increase in the sale price. For example, footing the bill for a $500 repair may be worth it if it adds $1,000 to your car’s value.

Kelley Blue Book enables you to check the private sale value and trade-in value of your car. You can see the value of your car in various conditions, such as fair, good, or excellent. If the cost of repairs is less than the value boost your car would get from moving to a higher category, the repair could be worthwhile.

Is Your Car Safe to Drive?

You should repair your car if it has issues that could make it unsafe. Also, make sure you are honest and upfront about any issues, as selling a car you know has safety issues could make you liable if those problems cause an accident.

The Bottom Line

Deciding whether to repair your car or sell it may come down to weighing the costs of repair versus purchasing another vehicle. In your comparison, don’t forget to include the costs of car registration, taxes, and your monthly payment if you plan on financing the purchase.

Before shopping for a car, consider running the numbers using Experian’s car payment calculator to get an idea of what you can afford. That way, you can focus your efforts on vehicles within your price range.

For any mortgage service needs, O1ne Mortgage is here to help. Call us at 213-732-3074 to speak with one of our expert loan salespersons. We are committed to providing you with the best service and advice to meet your financial needs.