# Car Guide Logo

## Chapter 4 Should I Repair or Replace?

There’s a point in a car’s life when you know it’s on its last legs and you debate whether or not to keep dumping money into repairs or cut your losses and upgrade to another car. But how do you know when to pay for repairs or when to find a new ride?

Here’s the general rule of thumb: If the cost to repair your car is greater than what the car is currently worth, it’s probably time to replace the car. If you’re in the debt snowball process or trying to save up for a car and aiming to extend the life of your existing ride a little further, we get it. Just know that you need to get a sinking fund in place to replace the car as soon as possible.

## Repair or Replace?

To calculate whether or not it’s worth replacing, you’ll need to do a little math. Do these three things to help you make your decision:

1. Estimate the value of your car. How much does your car cost now without the repairs? Kelley Blue Book can help you get an idea of how much you can sell your car for today.
2. Estimate the cost of the repair. Go to your mechanic and get an estimate of how much it will cost to repair your car. For example, there’s a huge difference between the cost of putting in new brakes and replacing your entire engine.
3. Determine how much value your repair will add to your car. Just because you spend \$1,000 replacing your car’s air conditioning unit, it doesn’t mean you’re adding \$1,000 of value to your car. Your mechanic should be able to give you an idea of how much value and longevity your repair will add to your car.

Let’s say you drive a \$4,000 car and you take it to the shop after you notice some strange noises coming from the engine. Your mechanic takes a look and breaks the news: You need a new engine. The estimated cost? \$2,500. Ouch.

You ask how much value a new engine would add to the car’s value and he says it’ll add another \$1,000. Since this is an older vehicle, you’re probably leaning toward selling the car. You could sell your car for around \$4,000 and take the \$2,500 you would’ve used to replace the engine and buy a \$6,500 car instead.

But remember, the math can only show you so much. Other factors, such as repair frequency and what you owe on your car come into play as well. Keep these in mind as you’re running your numbers.