The Auto Maintenance Dilemma
By Mike Hillyer | Related entries in AutomotiveI don’t know how many others out there feel the same, but I think I have an aversion to replacing my car. I’ll go out from time to time and look at cars, looking at the monthly payments that I would incur by buying the vehicle, and then a certain thought always hits me:
“If I took the $NNN a month and put it into my current car, I could fix the air conditioning in the first two months, replace the windshield (which only has a few small cracks anyway) in the third month, and repaint the car (no rust, just some gravel chips) in the fourth and fifth months. Then I would have a good as new car in five months and start banking $NNN in month six.”
That does not even take into account the increased insurance costs of buying a newer vehicle.
This thinking may not be that uncommon: according to Transport Canada, vehicles between 5 and 10 years of age accounted for 45.9% of all vehicles under 4.5 tons in 2001, while cars less than 5 years old accounted for 18.4% (the remainder of vehicles being older than 10 years).
I think the other cause for my aversion is the fact that my existing vehicle runs well (except for no air conditioning, but this is Canada) and, more importantly, is paid off. Once you are out of debt on a car that still has some life in it, there is a certain aversion to getting back into debt (at least for most people: I once heard a story of a man who went to the dealer to make his last payment and then buy a new car the same day, every time he paid off the old one).
I can’t find the source to quote it at the moment, but one study I read indicated that the ideal age to sell a vehicle is ten years. Up to that point, it is generally more economical to maintain a vehicle than buy a new one. I probably wont hold onto my sedan quite that long just because I expect to have three children before my car gets that old, and three kids in the back of a sedan does not make for a peaceful trip. Yup, sooner than later I expect I’ll find myself behind the wheel of a mini-van, but don’t worry: I’ll buy a sport edition mini-van so I can preserve some of my male ego.
So what do you think? How long do you hold onto a vehicle before you opt for a new one? Do you ever find yourself thinking of what else you could do with the monthly payment money when you go browsing?
This entry was posted on Monday, July 25th, 2005 and is filed under Automotive. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
July 25th, 2005 at 11:14 am
Ah my favorite subject. =)
Damn I don’t know how you can do it but we’re different people. In my little world, what you’re suggesting is blasphemy!
I tend to cycle through cars every two years and I buy/lease/pay two cars simultaneously. Unless its something very special that I will keep forever, I buy it, pay it off in 2 or 3 years and trade it in or sell it for something else.
The real question is how much are you willing to waste on repairs for an old, run down, piece of crap 1995 Toyota Tercel worth $500, for example, before you say enough is enough?
July 25th, 2005 at 11:32 am
Great dilema indeed. One that I am suffering from at the present as well. One thing I wanted to mention is that sometimes you can get the windshield replaced for FREE. Here in Florida, it is a state law that insurance companies must replace a broken windsheild at no cost (no deductible) to the owner. I guess it is for safety reasons. In any case, I have gone through this and all I had to do was call the windshield place and they handled the claim for me and came out to replace the windshield same day. All I had to do was sign a piece of paper and that was it! You might want to look into that…might save you a couple bucks…
July 25th, 2005 at 12:19 pm
There, you hit it on the head. A quick glance of your site shows that you take quite a bit of enjoyment from your cars, whereas I consider mine to be a way to get from point A to point B. A person’s spending habits with regards to cars will always be affected by this. For example, I really like computers, so I keep mine more current that most people would.
As for the 1995 Tercel, it is ten years old. According to the source I still can’t find to cite, that is the general age where it is better to sell and buy a newer vehicle rather than maintain it.
That being said, a well maintained ten year old Toyota may be old, but I doubt it would be run down and a piece of junk. Proper maintenance makes a big difference.
July 25th, 2005 at 1:22 pm
Similar article I wrote recently.
http://aneshome.com/pivot/entry.php?id=141
Think about what is the maximum ammount of money you are willing to spend on maintenance on a car. Lets say $1,500 or $2,000. Make sure that ammount is above the blue book value for the car (you do not want to spend a lot on a car that costs nothing). Spend just that ammount or less every year. Keep the car for as long as you can safely keep it spending just that ammount every year.
This may mean that some repairs will have to wait for next year.
And remember to think about scheduled maintenance as well.
I believe in keeping a car for as long as it makes finantial sense. No reason to waste money on a shiny brand new car unless the one you have is costing you a lot to mantain.
July 25th, 2005 at 1:52 pm
Nice blog
July 26th, 2005 at 6:29 am
Cars should be held onto until the cost of maintaining them is more than a replacement car should cost. That means if I spend more than say $2000 in a year on my car, it is time to think of replacing it with another used car. I am still paying off a NEW van, and the debt is killing me.
Now I have been known to drive cars until they die, and then 5 months later!!!
A car is not an investment, it is a luxury/necessity/money pit, treat it as such.
–C8j
July 26th, 2005 at 7:24 am
I have a 1981 Toyota Corolla that I brought at a junkyard for $100. Its in good condition but I’ve spent about $2500 in repairs in the last year.
Tommy why don’t you tell us what two cars you drive? A bus and a bicycle? You waste all your money on your cars but live in a small flat. I feel sorry for your future wife to marry a snob like you. You love your little car more than her!
July 26th, 2005 at 8:06 am
Be nice Jon, no need for personal attacks.
July 26th, 2005 at 8:41 am
I have a 1995 Honda Civic that I am holding onto until it dies. My dad had a Toyota truck that lasted, are you ready?? 300K miles. He got a letter from Toyota for that amazing feat. I drive 8 miles round trip to work and have 115K miles. I’m hoping it lasts until 200K, then I’ll replace it with another…yes, of course, Honda Civic. My fiance has a 1998 Saturn that has already needed a new transmission and engine. We know that will die next year and then we’ll get him a Civic. My average repair bill for my Civic is $500 a year.
July 26th, 2005 at 9:15 am
After paying off the current vehicle, why not invest the savings (savings is difference in maintenance and new car payment) in a low-risk account until the vehicle’s maintenance becomes too expensive or it gives out altogether. You would then have a much larger down payment for your next vehicle, or even be able to purchase it outright with cash. Not only do you save on interest and earn interest, but the more cash you have when you make a large purchase, the stronger your negotiation position; you can get a better price on the new car! By using an asset longer, you turn a debt/payoff/divest/new-debt cycle into an invest/purchase/invest/new-purchase cycle.
One needs to keep in mind that only certain vehicles and very good maintenance habits are good candidates for this.
July 26th, 2005 at 9:34 am
$2,500 in repairs for a car worth $100 is just wrong. Wouldn’t it be better to get a car for $2,500 in that case?
Cars are always bad investments and are total money pits. My advice would be to buy a slightly used one year old Honda or Toyota so you don’t take the initial depreciation hit, use it for about 6 years, then get sell it for a newer car. IMO 10 years is too long. Once the car gets to over 100K miles or 7 years, its becomes more expensive to maintain/repair it than to buy a newer car.
July 27th, 2005 at 12:41 pm
I’d argue that every car is ultimately “worth”:
resale value - cost of repairs - cost of insurance - depreciation
As such, a used car (even a 10 year old one) is likely “worth” more than even a 1-2 year old car.
July 27th, 2005 at 3:46 pm
I used to buy used cars and keep them for 10 or 12 years. Then the last couple of years I would hold my breath whenever I took a road trip - hoping the car wouldn’t breakdown in the wilds of Utah or Wyoming with my family on board. Now that I have become older and more prosperous, I lease new vehicles for 4 years, and get a new car before the warranty expires. I know it is a luxury and an indulgence, but what the heck.
July 28th, 2005 at 6:08 am
Unless its an exotic or high end car, like Ferrari for example, I don’t see how a ten year old car can be worth more than an one year old car especually if you compare the same or similar models, like the 1995 Nissan 300ZX against a 2004 Nissan 350Z for example.
July 28th, 2005 at 6:57 am
Oh I don’t know, perhaps if the cost of the debt on the car was factored in: If I finance a car for $30000 and it depreciates to $25000 when I drive it off the lot, then the guy with the $2500 car that is free and clear has a more valuable car from a cash-left-over-after-selling point of view.
July 28th, 2005 at 7:01 am
Bang on Mike. I’m not saying it’s actually a better decision, but “worth” isn’t as simple as resale value.
If: cost of used vehicles + repairs - resale value
Is greater than: cost of new vehicle + repairs - resale value
Then the used car IS actually “worth” more. As such, my friend’s piece of junk 800$ taurus that hasn’t needed any repairs beyond oil changes in 5 years is worth MORE than my brand new Hyundai.
But, I enjoy my Hyundai more, so neener neener at him
July 28th, 2005 at 7:02 am
Final thought: a car is ultimately a lifestyle choice, never an investment. As such, if Tommy likes and feels comfortable and feels it’s worthwhile to own newer cars, cool. But, if Mike feels comfortable with used cars and enjoys the experience (or doesn’t care) and enjoys saving money then that’s cool too.
July 28th, 2005 at 7:42 am
Ah OK Mike, I understand what Jeremy means by “worth” now.
One point though… in your equation, shouldn’t repairs not be factored into the new car formula as repairs, even maintenance on some brands, are covered with bumper to bumper warranties ranging from 3 year/36K miles to 5 year/60K miles.
July 28th, 2005 at 8:01 am
A 15 year old Lambogini is worth more than your mid life crisis gay honda jap ricer crap. Why do you even coment here? Probaly to show off how much money you have and act like a rich snob! You say being frugal is being a cheap ass then go back to your rich world and leave us alone!
July 28th, 2005 at 8:08 am
Jon I told you one already in this thread to not make it personal.
July 30th, 2005 at 12:21 pm
I drive a 1991 Honda Accord with just a shade under 140k on it. I’ve been keeping my eyes and ears open with regard to new models, prices, etc. so that I’ll be prepared when it comes time to replace it. However, (knock on wood) this thing is seemingly bulletproof. Aside from regularly scheduled maintenance (pretty much just oil changes and occasional preventive things like brake jobs) I’ve haven’t spent a dime on getting it fixed in over two years. The last substantial that I had was a bad alternator in January 2002. I keep waiting for something major to happen, at which point I’ll replace it. But until then, I just can’t justify it. After all, I really only use it for commuting to/from work. Our other car, in which my wife totes the kids and we do all of our bigger driving (trips, etc.) is much newer (an ‘04 Honda Odyssey) — I wouldn’t be comfortable using a 14 year old car as our primary source of transportation, but it works perfectly for what I use it for. Of course, now that I’ve said all this, it will probably break down in a big way in the very near future.
P.S. In two years, my car will be sixteen years old and eligible for a driver’s license at which point it can start driving itself around town.
–
fivecentnickel.com
August 1st, 2005 at 7:17 am
I have a 1991 Honda Accord that a bought for $2,300 a couple years ago at 150,000 miles.
On family road trip last week, it passed 200,000 miles. During the time that I’ve owned this car, I’ve had one breakdown (a small oil leak onto the spark plugs) and have had to replace the transmission computer (apparently a common problem with this car). I maintain it at the usual service intervals (based on mileage, because my daily commute is almost 60 miles). It’s been a great car, and I’d be thrilled to take it to 300,000 miles just so I don’t have to get another car anytime soon.
August 10th, 2005 at 9:38 am
> How long do you hold onto a vehicle before you opt for a new one?
I have owned 5 vehicles in nearly 30 years of driving. While I miss out on the enjoyment (?) of driving different cars, the pleasure I get from no (or rare) car payments more than makes up for it.
November 25th, 2005 at 12:32 am
testcomment133
May 21st, 2006 at 9:04 pm
To other late arrivals who find this thread throiugh Google as I did.
I just spent about CAD$1,500 on repairs, fixes and servicing on our 1995 Tercel. This included:
- Replace struts and strut mounts
- Replace Oxygen sensors
- Replace Battery
- New front brake pads
- Cooling system flush
I now have what feels like a brand new car which, since I’ve kept up regular maintenance of no more than $200/year, will most likely last for another 10 years.
This is an example of where keeping a car properly maintained will end up saving you thousands.
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