The Basics
Keep your old clunker or buy a
new car?
It may clang and bang, but your
despised old car may be the best bargain around. Here are the facts on keeping
the bucket-o'-bolts running and knowing when it's really time to upgrade.
By
Des Toups
Let’s
divide the car-buying universe into two camps: those who keep a car until it
drops, and those who think a new car will change their lives.
To the first, a round of applause. There’s nothing
short of the bus that’s cheaper than keeping a car until it crumbles into a pile
of rust. Almost any car can be nursed to 200,000 miles without endangering your
life, and even a new engine is cheaper than all but the cheapest used cars.
To the second, another round of applause, because the
16 million or so new cars they buy every year instantly become used cars soon
available at a considerable discount to those in Camp 1. And a moment of
silence, because a new car will change their lives in ways they never foresaw on
the dealer’s lot.
If you’re in a drive-until-the-muffler-is-dragging
wannabe, read on. We’ll look at ways to keep your car on the road longer and
realistically weigh the costs of upgrading.
I’d love to keep my old
car, but …
It no longer fits my life. You may have
taken up gardening in a big way but still own a Corvette. You may feel nervous
about taking your ’78 Ford on a trip to Colorado. Your little Accord may be a
tight squeeze when family comes to town. The answer to all: Rent. Why buy a
gas-sucking pickup because you visit Home Depot twice a year or a $30,000
sport-utility because you take the kids skiing for a week at Easter? Even at
$100 a weekend, renting is far cheaper than a car payment. Plus you get to drive
the very latest without worrying about insurance, license tags, maintenance or
depreciation. Or try swapping cars with a friend, returning it gassed-up and
clean (with the oil changed, too, if the loan was more than a day or two. You
want to be able to ask again next year.).
Those repair bills are really adding
up. Then do the math. Does the cost of repairs exceed
the cost of a new car? A typical new car is $21,000, about $350 a month for five
years after 20% down. A rebuilt transmission might run $1,500, a huge outlay in
one chunk, but far less than the $4,200 a year you’d spend on new-car payments
alone. If you can’t afford repairs twice a year, it’s unlikely you can afford a
new car payment every month. In any case, anybody with a car older than three
years should be tucking aside $50 a month for repairs and maintenance. If the
gods smile, you’ll never use most of it and you’ll have a tidy sum to blow on
your next car.
I’m nervous driving an older car.
Maybe little things are beginning to go: a new
thermostat one month, a starter the next. You might simply spend $50 on a AAA
membership and carry a cell phone, reminding yourself that even new cars aren’t
immune to mechanical failure. The upside of frequent breakdowns is that you’ll
get to know mechanics quite well. Find one you like. Flatter him. Pay your bills
on time. And the next time he fixes your car, ask him to take a few minutes to
see what else will need repair soon.
Never skimp on maintenance
Pay special attention to the things that will cost
you a fortune if they break. That means regular oil changes, tire rotations
and transmission tune-ups, even if the car is running fine. Timing belts, for
example, are spendy at as much as $600, and replacing one for no other reason
than that the odometer has turned 90,000 miles might seem wasteful. But let
one break and you'll find that repairing bent valves could cost you three
times that. Replacing torn CV boots, those plastic housings that keep grime
and grit out of the car’s constant-velocity joints, costs about a third as
much as a CV joint repair. (If your owner’s manual is long gone, Carpoint has
a free online service that tracks your car’s service schedule.)
The repair costs more than the car is
worth. A $1,500 engine rebuild that keeps your ’83
Toyota on the road still makes good financial sense. It’s at this point,
however, that all but the flintiest drivers begin to think about upgrading.
Which brings us to our next question:
Am I ready for a newer
car?
Your first step is to do nothing except write a check
to yourself in the amount you’re thinking you can afford every month. Put aside
a car payment every month for three months (long enough for at least one of
life’s little emergencies to crop up).
To pass the time, make three phone calls: one to your
bank, to find out what kind of rates they charge on loans to people with your
credit history; one to your insurer, to ask the rates for comprehensive
insurance on a model you think you’d like to buy; and one to your local DMV, to
see what registration and licensing would cost.
At the end of three months, ask yourself these
questions:
- How much did it hurt? If you skimped at all
on other bills or shorted the amount of the payment, you’re not ready.
- Would I have enough left over to pay for
insurance and licensing fees each year?
- Would I pay this much every month for the
car that’s in my driveway already? Sooner or later, every new car becomes an
old car, and you’ll feel about the next car just the way you do about your old
clunker.
- Would I rather have the cash? Our typical
car payment, $350, adds up to more than $1,000 in just three short months.
Perhaps you’d prefer to get a tan in Mexico and limp along with ol’ Betsy
another year.
- Could I continue to save for another year
and simply pay cash? Five grand would buy any of hundreds of reliable used
models. Save for two years and you’re in new-car territory, if your old car
will fetch a few thousand.
If the craving for a shinier car hasn’t passed
in three months, at least you begin the shopping process with a few months’
worth of car payments and a more realistic idea of the hit your wallet will
take.
|
