As the owner of Living The Dream Auto Care I am asked this question quite often. The answer however isn't an easy one to answer. There are many variables that go into the equation and is also an individual decision.
All vehicles require regular maintenance to ensure longevity of the vehicle. Even the greatest maintained vehicle on the road will run into repairs that are just part of vehicle ownership. “Wearable items such as batteries, brake pads and rotors, axle boots and many other components will eventually need to be replaced. A timing belt service for example is one of the more expensive maintenance items that are usually recommended around 90,000 to 105,000 miles. A service such as this can run between $500 and $1,000 depending on the vehicle.
Each vehicle owner has a “number” that should be calculated and thought about when it comes to repairing or buying another. That “number” is unique to each person as to their salary, vehicle needs, vehicle wants, and budget. To calculate that “number” you need to know the vehicle you would be interested in replacing this one with. Now comes the math portion, take the total price of the vehicle, interest involved in the car loan, sales tax, titling and license fees, increase in insurance, and the 15-20% depreciation cost when you drive it off the car lot. For example, let’s use a 2012 Honda Accord Ex-4 cylinder. Cost: $26,283, Sales Tax: $1643, Title and Registration:
New vehicle ownership does have its perks. You should have 3years sometimes more of problem free driving and if there is a mechanical issue it would be covered at the expense of the manufacturer. Many manufacturers also offer a year of free service with your purchase. So not having unforeseen repairs looming overhead, in some cases this is worth the piece of mind.
Let’s look at a 2006 Honda Accord with 90,000 miles on it. If the repairs at this point include a timing belt service, front and rear brake service, and spark plug replacement you will be in the vicinity of $1780. Throw in 4 oil changes for the year and 2 tire rotations this would put your monthly vehicle cost at approximately $162 per month.
As I see it there are many factors that can compel someone to want to keep their vehicle or get a new one. All these factors are very hard to put into an easy equation. I believe that when your yearly repairs equal that of 3 months of first year of new vehicle ownership it may be time to seriously consider upgrading. Looking at the example above, $4221 equaling the 3 months is a substantial down payment on a new one and would reduce the overall monthly ownership cost.