Repair or Replace

Q:  My car needs some repair work that could become costly.  Should I just trade it in for a new car?

A: This type of decision can be difficult. The value of the vehicle, the cost of the repair and your finances factor into the decision. It is important to have a savings fund built up for emergencies including car repairs. With adequate savings for the repair an individual may avoid the need for another vehicle and additional debt. 

  1. Review your auto insurance to evaluate your deductibles/premium
  2. Experts indicate that used cars are very functional and depreciate less than new cars. A used car can be more cost effective option than buying a new one. An option to consider is buying a 2-3 year old car with a good repair record. Consumer Reports magazine June issue is an excellent source of information on car reliability and should be available through your library.
You can further discuss the options with your coach.
Posted by Gary Katz, Bank On Coach
If feasible obtain estimates from at least 2 mechanics to make sure you have a reliable repair estimate. A general guideline: If your annual repair bills exceed a year’s worth of car payments, then you should consider another vehicle.