Should I Fix My Car Or Sell It?

Your car broke and the repairs are expensive. I'm sorry to hear that. Many people who own older vehicles just suck it up and pay for repairs without asking themselves an important question; should I sell my car or repair it? Let's break this question down into several steps to make it easier to understand, and let's also assume that you need a car and that not having one isn't an option for you. What next?

Step 1 - Get a written estimate from the mechanic for the cost of repairs

You need to know how much your repairs are expected to cost so the first step is to ask for a written estimate with a breakdown of parts and labor. Ask the mechanic to explain to you what is being done and why. Make sure that you are comfortable with their explanation of the work being performed. Read a magazine in the waiting room to mellow out a bit.

Step 2 - Determine the value of your vehicle assuming that it was repaired

Now you need to find out how much your vehicle would cost if you were to go ahead and pay to have it repaired. There are many different resources you can use to figure out your car's value, including KBB and Edmunds. Put in the appropriate information and you should have a rough idea of what your vehicle is worth. Remember this figure.

Step 3 - Determine how much money you could get for your vehicle without the needed repairs

This step gets a bit more tricky. You need to find out how much money you could get if someone bought the vehicle without you performing any repairs. There are typically mechanics, junkyards and other resellers that buy cars to either sell for parts or to fix them up and resell. Local and national charities exist that will accept your vehicle in return for a tax break, which could also be an option.You can also ask the mechanic if they know someone who would be interested in purchasing the vehicle.

Step 4 - The calculations

Now it's time to do some math. Let's use the following numbers for the sake of example:

Cost of repairs (from Step 1): $2000

Value of car is repaired (from Step 2): $5000

Value of car without repairs (from Step 3) : $1500

Here are the two figures we're looking for:

A) Cost and value of vehicle if repaired:    

Cost of repairs: $2000

Value if repaired:  $5000

You will pay $2000 to have a vehicle worth $5000

B) Cost savings and value of vehicle if not repaired:

Cost of repairs: $2000

Value without repairs: $1500

You will keep $2000 and have a vehicle worth $1500 if you don't repair it. 

Step 5 - The verdict

As you can see, if you fix your vehicle, it will cost you $2000 and you'll end up with a $5000 vehicle.

If you don't fix your vehicle, you'll save the $2000, but your vehicle will be worth $1500, for a  total of $3500.

Therefore, in this instance you're probably better off paying the $2000 to fix the vehicle since you will only have $3500 worth of spending power if you don't fix it.

Other factors to consider- Of course, there are other things to keep in mind when deciding whether to fix your car or get rid of it, such as how much money you have available for the repairs or a new car.

This article also assumes that you won't be receiving any help financially from a warranty or insurance coverage.

Also, the reliability of your current vehicle is an important factor since you might have to keep spending money over and over again after paying for repairs and will end up paying more in the long run than you would by trading it in or buying another vehicle.

Ultimately, it's important to follow the above steps if you have any older vehicle that needs repairs or even a not-so-old vehicle that needs a very expensive repair so that you know where you stand financially as a vehicle owner.