Keep spending money fixing an old car or buy new car

Question

I have a 2004 Honda Accord EX. It has close to 200k miles but is paid off. KBB says its worth is between 2500 for trade in or 3500 for private party sale). I don't know much about cars but it seems to still be in good condition. I've brought it in every 10k for servicing and have it up to date on any recall repairs required.

At the last servicing, the dealership said that my brakes needed replacing (~$800 at the dealership, probably cheaper elsewhere). Also, the tires were old but they still had some wear left (7 yrs old but measured at 6/32). Estimating about $600 for tires from Costco. I was advised to look into getting new tires due to the rubber starting to break off and having a possible blow out on the freeway.

So right there is around $1400 in repairs, about 1/2 the value of the car. Someone told me if the repairs are cheaper than a car payment, then do it. In this case, if I keep the car about 4 months, then it's close to break even.

However, due to the car's high mileage, it's possible that something might come up within this 4 months and to break even on whatever the new repairs are, I will need to keep it longer and thus a possible endless cycle of repairing/keeping an old car to break even.

So, does it make sense to put in ~$1400 to fix now and drive for at least another 4 months or start looking for a new car and not worry about repairing a possible money pit?

UPDATE: This is a 2004 Honda Accord EX in "good" condition (good after answering the questions from KBB)

UPDATE #2: Seems like the price can change too. I just checked on KBB again for the price and it says my vehicle is a low volume vehicle and can't give me a trade in price but gave me a private party sale price. I guess the price can change from week to week (or in my case about 3 wks ago) depending on the market.

EDIT: I just realized I should clarify my thought process in this situation. There were a couple times in the past where my family kept putting money into an old car b/c "they don't make them like they used to" or "it's still a good car. Don't get rid of it", or like everyone is saying here in the answers and comments. One car we had, an old Volvo, needed repairs and we put about 9k over 18 months into the car and it still wasn't working right. We sold it but only got 1k from the buyer after pouring so much money into it.

Another time, we had another car that needed a 2k repair. We calculated that to get our money's worth, we needed to drive it for about 7 months to get our money's worth and break even. We drove it 2 months before it broke again and needed a 1k repair. We estimated needing to drive an additional 3 months to break even. After another 2-3 months, something else broke but we kept throwing good money after a bad problem. I don't remember the total amt we wasted in the 2nd case but the issue was the same, we put a lot of money in but didn't get our return and didn't know when to cut our losses.

So, this is why I'm asking this question now with my current car. The lucky thing is, I've looked up the KBB price before anything happened (we didn't look up before with the two previous cars since there was no internet or iphones at the time) and I'm more knowledgeable due to personal experience. Hopefully this explains my thought process in this situation. I don't want to get caught throwing good money after bad or feeling like I need to keep driving to get my money's worth from the repair. Thank you for everyone's answers and comments thus far. They've all been helpful.

Answer 1

If a high mileage car has been thoroughly maintained with a credible service history, there is no reason to discard the vehicle because of a hypothetical future expense. Considering the low value of the vehicle, it would be prudent to also lower the cost of the repairs. U.S. car dealerships have a well-known reputation for charging significantly higher repair rates than independent repair shops.

Lower the cost of the repairs: brakes can be done at independent shops for half what the dealer quoted. Sears can install a set of 4 tires on an '04 Accord for $331 out the door. It makes no financial sense to purchase costly repairs for a low-cost automobile when economical alternatives are available.

Answer 2

I usually use this process:

determine fair market value. This will be an estimate from KBB or similar minus any known repairs or maintenance needed. (Est)-(repairs)=FMV

IF FMV < $0 walk away and sell it for whatever it will bring. You would be better off even just buying a similar model than buying the repair.

If FMV > $0 ask yourself this question: If I had the fair market value in cash, would I purchase this car? Essentially, this is what you are doing if you choose to keep it. This is where your needs and opinions come into play. If you wouldn't, sell it and buy something else.

Unless you have certain specific numbers on the future maintenance and repairs needed, you are just speculating on future events. In general, the probability of repair for the age and condition will be reflected in the estimate of value, so that is captured in the analysis already.

There is also no guarantee that another car would not have some other large repair, even if it was newer.

From just the numbers, I can't think of many reasons not to drive a car until it dies (FMV < $0) or until you find an excellent deal to replace it.

Answer 3

From what you have typed Up, this is very impressive I would not be surprised if you could squeeze another 50,000-100,000 out of this car. Honda has a good reputation for making reliable cars. Also from your post you mentioned that your are not too car savvy. Dealership repair are usually unnecessary after the car is off warranty reason being that most if not all repairs will be 2-3x more than a good reputable local shop. Also many aftermarket parts are just As good if not better than dealership car parts and not to mention that with Hondas the options are Endless...parts are easy to come by. Buying a new car has some benefits but usually it ends up being more expensive to go new vs maintaining an older car. At this point in time, you can save the most money by finding a local reputable shop to do your repairs, there is no point in going with the dealer, also if you are using regular motor oil ( not synthetic) you don't need to change it every 3,000 miles like the dealer says, oil technology has improved so much that you can go 5,000 miles with no problem, just make sure your oil level it topped off. I will say this though anything electrical that is an issue is a good reason to get rid of the car.

Answer 4

My notion if you drive an older car with much simpler cheaper mechanicals and manual transmission, then only reason to get rid of it is if the body/frame is getting unsafe from significant rust.

Course I do ALL my own car repair and have time to shop around for best deal on parts. Not opposed to some re-engineering (I weld) if it's significantly cheaper or more convenient than original. Hotrodders have done this for generations, just they don't usually make practical daily drivers. But no reason somebody wanting a practical daily driver cant.

Lot modern cars, it's the automatic transmission going out that is the death knell. They have become very complex and super expensive to rebuild or replace. Thus my preference for only manual transmission, the more robust and heavy duty, the better. Though they have become rare as hens teeth on anything newer than 20 years old. People that can pay crazy new car prices want all the luxury options. Dealers make more on cars with luxury options so don't stock stripped bare bones models. Thus nobody buys them cause they aren't easily available and then since nobody buys them, the manufacturers don't produce them. Vicious downward spiral. No doubt market will correct when we finally end this second gilded age nonsense. Not everybody can be Big Daddy Warbucks, nor can they buy fancy luxury mobiles on credit forever. And those luxury mobiles tend to be very complex and expensive to repair when they get cheap enough for Joe sixpack to buy. Govt won't let you simplify them to make them cheap to repair, want everything strictly factory issue.

Answer 5

It is almost never going to be more economical to buy a new car versus repairing your current car. If you want a new car, that is justification enough.