Machines fail. Cars are machines. Eventually, they fail – or put more precisely, their systems eventually begin to wear out. Stuff starts to go wrong. Then, it starts to go wrong more often. The car is no longer reliable. Or it requires frequent fiddling with – which gets expensive if you have to pay someone else to do the fiddling and is a hassle even if you do the fiddling yourself. You fix one thing one week, then next week or next month something else goes south.
Meanwhile, despite all the money you’re putting into the car, it’s not worth more.
This happens to every car, inevitably. Some sooner, some later. But no matter the make or model – no matter how well-built or reliable – someday, even the best-made (and most fastidiously maintained) car is going to reach this point – the point of diminishing returns. The point, after which, you are throwing good money after bad by paying for repairs and upkeep.
The hard part is knowing when you’ve reached that point – and (ideally) parting ways with your old car before it becomes an unreliable money pit. And before you’ve already sunk a bunch of money into it that you’ll probably never get back when you sell it or trade it in.
One very good rule of thumb is what you might call the Equity Rule.
You have “x” dollars of value in the car (as measured by current used car value guides). You should always know – approximately – the current fair market value of your vehicle. This is the first number of the equation. Jot it down on a piece of paper (or whatever) and update it once year.
Because without that number, it is impossible to intelligently answer the Big Question: Is it worth fixing?
The next number(s) you’ll want to have on hand (or in your head) is the approximate cost of major repairs to that vehicle. For example, if the transmission fails, or the AC stops working, how much will it cost to rebuild/replace/repair that component/system for your particular make/model vehicle?
A good way to do this is to just call a few repair shops and ask for an estimate. If you have, say, a 2002 Honda Civic, call around (including dealers) and ask what would be a ballpark estimate to put a new (or rebuilt) unit in it. You won’t get an exact number, of course. But you will get a very good idea.
Also, root around a little online to find out what problems (if any) your particular make/model/year vehicle may be prone to – and when?
Check owner Forums, for example – or just type your make/model/year vehicle into your web browser along with “complaints” or “problems” and see what comes up.
Forewarned truly is forearmed.
Many people have no idea – until it’s too late – just how expensive it can be to fix/replace certain items . A new transmission, for example, can easily cost $2,000 or more, depending on the vehicle – just for the transmission. Not including the labor to install it. Putting in a new AC compressor (or electronic control unit, if it’s climate controlled AC) can be similarly wallet-draining.
And many people have no clue that the vehicle they’re driving is prone to certain very expensive failures – until the expensive failure has happened.
And that’s the trap.
People don’t know what their vehicle’s worth – and then they get blindsided by huge repair bills they failed to anticipate.
But if you know ahead of time that your car’s worth, say, $3,500 and that putting a new transmission into the thing will cost you $2,000 – you probably won’t decide to put a new transmission into it. Even better, you’ll know it’s time to sell/trade it before the transmission craps out on you – which, because you did some research, you know is a distinct possibility after about 120,000 miles or so. So you do the smart thing – and dump it before it gets to that point; while it’s still in good running order without having to spend 40 percent of what it’s worth to get it back into good running order.
That’s the Big Ticket stuff, of course.
You should also keep track of incidentals – the “little things” that you’ve been spending money on. A small notebook kept in the glovebox is ideal for this. Now instead of guessing how much you’ve spent on minor repairs and so on over the past year, you can know how much you’ve spent. Now, divide by 12 and you’ve got a handle on how much it’s costing you per month to keep the old beast going. Weigh that against what the car’s total value is and stack all that up against what it would cost you, monthly payment-wise (or lump sum-wise) to replace the old beast with a new car – or at least, something newer.
Do that, and you’ll likely never be the one left holding the bag.
Throw it in the Woods?
If you’re doing you’re own work, only buy cars over 10 years old because banks won’t lend on them and they have reached their “real” Cash Price. I’ve subscribed to this rule for twenty years after talking to a banker wo wouldn’t lend to me on a 7 year old Delorean.
With old cars, you should be more interested in your cost per mile, not resale value, if any.
This is a point of some debate between my wife and me. I figure that when the annual repair costs more than 50% of a replacement vehicle it’s time to bite the bullet and part with some money. She disagrees and makes me park the 95 explorer in the street.
For everyone, there are subjective variables – among them:
* What is your comfort level with debt/payments vs. possibly having to spend money on unanticipated repairs?
* Can you do most repair work yourself? Or do you need to pay someone else to handle that?
* How important is it to you – and your spouse – to have a “reliable” car?
On that final one: I got us – my wife, really – a “new” (well, newer) pick-up with about half the miles on it that my truck has. I want her to feel comfortable/safe driving and not have to worry about breakdowns. She’s not a wrench, so if the rig craps out she’s stuck – and that I don’t like.
I’ve lived in the Chicago area and Minneapolis. Both environments are hell on cars during the winter. Salt is bad but extreme cold is another issue to contend with. I remember an ignition key breaking in two during a spell of unusually frigid weather. Needless to say, it was a downright bitch to remove the fragment of key lodged in the switch with clumsy semi-frozen fingers. I was lucky, however, because I had a spare key and it took place during daylight hours in a pretty safe neighborhood. Windshield washer nozzles do not dispense fluid properly if at all when they are partially coated with ice. Even if they do work the solution may partially freeze on the windshield worsening visibility. Keeping long heavy duty jumper cables in the vehicle is a necessity. Even if the battery is good the engine may just not want to start. Just when things seem to be going OK the engine may suddenly die at the worst possible time and in the worst possible situation because of stupidly forgetting to add gas line anti-freeze. As far as weather goes I sometimes think anywhere but here but maybe it isn’t all that bad. I heard that Arizona had over one hundred days of over one hundred degree temperatures this summer. I guess in the best of all worlds one would live in the south during the winter and in the north during the summer.
I live in the mountains of rural SW VA and the winters here can be pretty harsh (last December, for example, almost every day was 25 degrees F or colder). When it gets like that, I bitch and whine. But then, I remind myself what it’s like where my patents live in Phoenix, AZ.
I’ll take our winters.
I drive – and I DO drive, she’s not a garage queen – a 1963 Lotus Elite. Yes, she needs maintenance, by yours truly because the nearest specialist shop is a thousand miles away in England, and parts aren’t cheap; but her handling is as much a delight as her looks, and she’s irreplaceable, sparing me the difficult decisions you describe. Golden oldies are a great alternative!
(Send me an Eaddress if you want a photo.)
Maintenance by “yours truly” is a huge factor. If you’re one of the few – people like those who come here – yo can keep almost any car going almost indefinitely. But for the typical person, who has to pay someone else to do most repairs, there is a point of diminishing returns – and that’s what the article was trying to address.
The point I neglected to make is that I CAN maintain an oldie. Try that – or, sanely, DON’T try that – with one of today’s compterised marvels! You need expertise and equipment that are vanishingly rare outside dedicated garages, for almost all cars built in the last decade, and for many twice that old.
I’ve already been thinking ahead to when my current “new” vehicles (a 1998 Nissan pick-up and a 2002 version of the same truck) are no longer cost-efficiently serviceable. I have thought about buying something long the lines of a ’70s-era Ford F-truck (or equivalent) and making a few key upgrades to it, such as an overdrive transmission (for the fuel economy and reduced wear and tear). But, no computers; no “safety” crap – and very little in the way of emissions controls. Such a vehicle can be kept going almost indefinitely, with the major potential issue being rust. But even that can be dealt with – and to a great extent, prevented.
When the time comes, you should consider
buying a vehicle from the west coast. No road salt, no pollution. So no rust. My 1994 Nissan pickup and my 1996 Maxima, my sons 1990 Toyota Cressida are rust free. So the paint is still shiny. The frames are sound, and still have the paint they came with. The nuts and bolts are as easy to turn as when they came from the factory.
I have read stories of mechanicly sound, low mileage vehicles in your part of the country that have to be junked due to rust damage. If you would buy a west coast vehicle with worn out running gear you could put the good parts from your rust buckets in them. This would be much less expensive than repairing rust damage on what you have.
On the other hand, vehicles survive much longer now than they used to, under the same conditions. For example, I have that ’98 Nissan pick-up. It sits outside; I only wash it every once in awhile. The paint is still shiny and there are only a few tiny areas around the fender lip where visible rust bubbles are present. The frame is still solid. So, it’s almost 15 years old and still ok, Should be ok for another five years, easily.
You can probably remember how it was back in the ’70s. Cars often had Swiss-cheesed fenders in as little as five years; severely rust-eaten cars were a common sight (in my area, on the East Coast). I rarely see a severely rusted car on the road anymore – and also see many vehicles on the road that are 10, 15 or more years old and still look great.
I’ll second that JvG. My ’93 Wrangler was a California rig and it was as clean as whistle when I bought it in ’05. Road salt here has taken its toll on it somewhat, but not too bad. I’ve considered making a pilgrimage to New Mexico or Arizona for my next 4×4 pick-up for the very reasons you described.
You mentioned looking for a vehicle in New Mexico or Arizona. You could expand your search area. Believe it or not, I live in Portland, Oregon. Since we are 70 miles inland from the Pacific, there is no salt air. We do not use road salt. No acid rain. Little air pollution. Yet we get 36 inches of rain a year. Pure water does not seen to hurt cars. The cars from the 1960s still are rust free. A friend of mine drive a 1971 Datsun pickup. Half of the original paint is still on the truck. the rest is bare metal. Just a bit of surface rust.
Seeing cars crushed from outside the road-salt belt and sea coast areas can be kind of painful. Pretty much everything that has a fairly straight body looks restorable to me. If the rest of car is gutted it doesn’t seem that bad to me, because the rust isn’t there.
Rust has been my number one enemy since I started getting into cars. Nothing even comes close to the attack the chicago driving environment does on steel, rubber, plastic, and other materials. Not even aluminum is safe…
Ever watch shows where they restore/rebuild cars? What they call serious rust most of the time is laughably mild unless it just happens to be in a bad spot.
I hate rust, too.
It’s the single biggest (most expensive) aspect of restoring an old car, usually. If you’re a decent wrench, rebuilding a ’50s, ’60s or ’70s-er car’s drivetrain is fairly easy – and fairly inexpensive. But dealing with a rusted out unibody, or cowl, or shock towers – that is a monster PITAS (unless you are a magnifico welder/body man and have a rotisserie and other righteous tools).
On bikes, though, rust seems to target all the “soft parts” – the chrome, especially. The S1 triple I am rebuilding, for example. Pretty much all the shiny parts were shot and had to replaced or rechromed. But the frame only had light surface rust that was easily stripped with the sand blaster.
It costs about $7,000 to replace engine, transmission, rear end, rebuild the suspension, replace the starter and alternator, replace the tires, repaint, and reupholster a vehicle. After the expense, the vehicle should be good for 100,000 to 150,000 miles with regularly scheduled maintenance. It costs more for foreign cars than domestic. If the car is over ten years old, the investment will be unrecoverable if the vehicle is destroyed or stolen. Most vehicles are not destroyed or stolen. The other issue is most people do not have $7,000 and it is easier to finance a new or newer vehicle, but generally this is going to cost three times as much, $21,000 on average for a new stripped down car, or a nicely appointed used vehicle. Over a life time, reworking older vehicle will save enough to pay for a house. Buying new/newer vehicles will help most people arrive at retirement, well, broke.
Hi Old Bill. You didn’t include the elbow grease time which is something lots of people can’t afford. I recently purchased a new/used car for this very reason.
Then there’s the fundamental issue of having another vehicle to drive while doing the work. Most people only have one car and the system discourages multi-vehicle ownership. (multi-home too)
Very true. I should have mentioned this in the article. I’m so used to having multiple back-up rides that I guess I just assumed everyone else does, too. But of course, they don’t. And if you don’t, there’s pressure not just to have a very reliable car but to be able to fix it very quickly if it has a problem. This also means you want a car for which it is easy to find parts. That automatically excludes a lot of older stuff, which it’s sometimes not easy to find parts for (or at least, not easy to find them “right now”).
Having lived in the country almost my entire life, I just assumed redundant vehicles are a necessity. At least one of them must be a 4WD or AWD (or plan on being snow-bound from time to time). The only way I can see that you’d be okay with one vehicle is if you live in town where public transportation is available. If your rig is down for more than a few hours, you could at least ride the bus or train.
I guess I’ve always instinctively subscribed to the prepper philosophy that “two is one, one is none” for anything I consider critical, inlcuding vehicles. That has often meant that I sacrificed things I wanted, to have multiples of the things I needed.
So for less than the annual cost of a new economy car, I have four older vehicles. I only have to walk when I want to. But what that means is I have to carry tools, fluids and a fire extinguisher, keep my AAA membership current and have my wrecker man on speed dial.
I don’t disagree – and do the same myself – but this assumes you can do that level of work (vs. paying someone to do it) and have the time to do it, too. Most people can’t do the work themselves and many who can don’t have the time to do it (see Dom’s comment above).
I’m currently driving a 2004 Explorer with 316,000 on the clock. It still looks great because I didn’t make a practice of running into things,,and rust seems to no longer be much of a problem. The interior is in fine shape, too. It does not use oil, nor does it drip on the garage floor. The company gave it to me when I retired because the fleet manager didn’t want to deal with getting rid of it. Since I have $0 in it, The $600 worth of tires it will need fairly soon is no big deal. Since it will cost me $13,000 or so for another one, I think I can afford to put a couple grand into a new transmission and another couple grand into a used engine, if that time comes. I ordered it with the heavy duty trailer tow package, and discovered that it is a superior tow vehicle compared to the 2000 GMC Sierra my wife got tired of trying to park.
Hey John. That is amazing mileage on that vehicle. Its a V8?
Dang, that photo of the S-10 Blazer looks a lot like mine. Twice lately I’ve paid repair bills that almost equaled the price of the car, but it was Still cheaper than buying a new one or even a used one. So far, the repair costs have been lower than what I imagine a single car payment would be.
Having no payments is a joy. Of course the trade off is that I could wind up walking at any time, but so far it’s been worth the risk.
In my case I just figure the price it will fetch at the scrap yard is higher than a tow ride home so I can’t go too wrong. The only problem I see is, I would be without a car when I want to look at a replacement, but I think I could find other work-arounds for that.
At any rate, I can see how my strategy of carrying duct tape and bailing wire while being prepared to walk wouldn’t work for everyone.
Every time I think about buying a 4×4 for $4999.00 I think about how much gold that would be and I just keep driving what I’ve got.
Most of the 4×4’s in my area under $5000 seem to be not worth it (thanks C4C) and the ones more expensive sure do have a lot of miles on them. Winning seems tough, not like in the old days when cheap good cars and 4×4’s were plentiful. Sometimes I’m tempted by Beatles after reading your other article.
Btw, you write good stuff.
Amen on C4C. Our local used car place (small town, one stoplight in the whole county) hasn’t had anything decent – or inexpensive – in an older truck or 4×4 in a long time. Prior to C4C, they routinely had good-condition older stuff (with reasonable mileage) that was priced around $7k or less.
Yeah, let’s “stimulate” the car business by paying some people to throw away perfectly good vehicles and subsidize the purchase of new ones for them – while at the same time driving up the cost of good used vehicles for people with less means, or who try to live within their means….
Eric, you know that the Big Three executives and the UAW need to eat too. Caviar that is. Wasn’t C4C done “for the children”?
The whole thing made my blood pressure tilt. I’ve always tried to be financially prudent when it comes to vehicles, so I never bought new and I never bought one I couldn’t pay cash for (all of them under $7,500). Millions of other people did the same. What’s our reward? A government policy that drives up the cost of used cars by destroying millions of perfectly good ones while rewarding people who aren’t financially prudent when it comes to vehicles – by subsidizing the purchase of a new car with tax dollars taken out of my hide and yours.
The _whole_ society has been re-geared for the benefit of the irresponsible, the unplanning, the unthinking, the risk taking, and so on. Take a risk and it comes up snake eyes, government will make a responsible person pay! ARG!
Another thing that gets me is how these statists tell me I am so lucky yadda yadda and that I should have to cover other people because it’s good for society. WHAT? There’s no luck. I’m risk adverse, and I have a lot of downsides for it but the upside is that when I lose my job I don’t end up homeless. The bad side is that I don’t get to enjoy as much material wealth or vacations or parties or any of the other things the hapless people get when times are good. But when times are bad I get through them with relative ease. It’s not luck. Ok I’ll stop now, this sort of thing just gets me going…
You and me both… drives me nuts that (for example) my wife and I are effectively punished for buying cars we can afford (and a home, too, for that matter) while people who live lavishly, well beyond their means, expect bailouts and sympathy. Maybe I’m a dick; I dunno. I just can’t work up a lot of sympathy for the guy who bought a $400k McMansion with a 0 percent down five-year ARM on an annual income of $60,000 who has three kids and a Chevy Tahoe and a BMW 3 and is whining now because he’s broke….
no sh#t! spot on.
I can empathize; some of my coworkers (most of whom are in the 70K+ annual salary range) bought new rigs under C4C and then had the audacity to rub it in to those of us who didn’t that we were subsidizing them! One of them in particular not only did that, but rubbed it in that his “farm” is subsidized too. Some “equal protection under the law, huh?
Hey, how about this?
I’d really like to finish our basement – and I have excellent credit and a $30,000 limit on one of my cards. Maybe I should just just charge it… then when the bill comes due, explain that I “got in over my head” and just can’t pay…
The only thing keeping millions of people from behaving like maggots is their own self-respect, because there’s not much other reason to play by the rules anymore.
It’s not just that it’s rubbed in, but people such as ourselves are considered “dicks” or worse because we object to being taken from to support people who caused their own problems. But I have found something interesting. The wealth creators are becoming more and more libertarian in outlook. More and more angered with how society is structured. I am in a wealth generating career and I’ve found people’s economic politics tend to mirror how much wealth they create.
I don’t think productive people are let off the hook either. It’s a social game that productive people just usally aren’t equipped to play. I think it takes a life time of practice at being a parasite.
Clark, I know what you mean. I got rid of an ’88 S-15 Jimmy about four years ago that looked like that. It was still running good with almost 250K on it, but the seat were leaning waaaay back and all sorts of little things were broken. The nice thing about it was there tons of parts in the junkyards for it. The really cool part was I paid $600 for it sealed bid and nearly doubled my money after putting 90K miles on it (the 4WD worked and that’s worth at least a grand around here)! I’m no fan of GM by any stretch, but it was certainly cheap transportation, warts aside.
Excellent tips. Any advice on where to look online for reliability history in one place?
For example, I just traded in one of my vehicles for a new model, domestic for Japanese. Traditionally, I’ve purchased the factory extended warranties on American vehicles as a) I typically can afford to do so, and b) I have ALWAYS had them pay for themselves, usually within a year of the expiration of the factory warranty. In fact, on one of my trucks, it paid for itself five-fold.
I’m now trying to decide if the new car, which I plan to keep for longer than the factory warranty is good for, needs the extended warranty. Being Japanese, and not being the first year of its model, I’m leaning towards skipping the extended warranty, especially since I take good care of my vehicles.
I owned a five bay garage and found that repairs on Japaneese cars usually cost more than domestic. Failures are about the same.