Talk Yourself Out of Buying a New Car

You’re looking at a $2,000 estimate to fix your car and, since it’s worth only about $2,000, it seems pretty clear it’s time to buy a new car.

Or is it?

Unfortunately, there’s no neat little mathematical formula that will tell you when to dump your old car. Instead, you’re faced with a ton of variables. Also, let’s face it: Most people would like to use a big repair bill to justify getting a new car.

So to shed light on this common fix-or-buy-new question, let’s isolate the variables to see if you need a new car or you just want one.

How much do you drive?

It’s always a good idea to start by examining your needs. Do you have a long, congested commute through the city? If so, you don’t want to be marooned in the breakdown lane waiting for a tow truck. A new car will definitely provide a higher sense of security. And a new car provides the latest technology such as blind-spot monitoring and emergency braking.

If, on the other hand, your car spends a lot of time at the curb, buying a new car would be a giant waste of money. But sometimes you need a car, you say? Here are just a few ways to get where you’re going or find wheels that are much cheaper than a car payment:

• Bicycling. Just think of the weight you’ll lose.

• Bus or mass transit. When you arrive, you’re free of parking hassles and costs.

• Uber and Lyft. Let someone else drive and just relax.

• Car-sharing services such as Zipcar. Check to find the availability in your city.

• Peer-to-peer car sharing like Turo. You can rent the car of your dreams and have it delivered.

• Rental car agencies. The competition is stiff and the mileage is unlimited.

• Family and friends. Catch up on family news while you get where you’re going.

What’s your budget?

A $2,000 repair bill is a huge hit to your budget. But buying a new car is a much bigger and longer commitment. As a friend of mine used to say, $2,000 doesn’t buy you much of a car but it can buy a whole lot of repairs.

Repairing your current car will also save:

• Sales tax and fees: Buying a new car in a state with a 10% sales tax will boost the cost by thousands of dollars.

• Trade-in lowballs. Dealers rarely give you the full value of your trade-in. And most people hate advertising their car for sale and meeting with strangers.

• Ownership costs. All the new car expenses are higher too: registration, sales tax and insurance.

• A years-long financial burden. Having a new car is really exciting — until the “new” wears off. Then you find a ball and chain attached to your budget.

• Time. Getting your car fixed is usually a lot faster than schlepping around to car lots, test driving, negotiating and buying a new car.

• Stress. Meeting a steep car payment month after month can grind you down, especially after the new car smell fades.

What’s your risk factor?

If you’re risk-averse, a new car is probably your best choice. It’s going to be more reliable, and if anything breaks, it’s covered by a bumper-to-bumper warranty. Although your monthly costs are higher, there are no surprise expenses.

However, a person who’s willing to shoulder risk is a person who will save money. That’s true when buying higher deductible insurance, waiving extended warranties and driving a used car. Sure, the repair itself seems like a risk, but it’s much less than meeting a new car payment and all the related expenses.

What’s wrong with your car?

Not all mechanical problems are created equal. Here’s when fixing the car is a good idea:

• The problem is clearly identified and the fix is guaranteed.

• You have a trusted mechanic who is confident that the repair will be successful.

• Your car is in otherwise good shape with no known additional problems.

And here are times when trading it in for a new car is an attractive option:

• You have plenty of money, like new technology and enjoy driving.

• Your car has several problems and will soon need other work, such as a brake job.

• The problem is undiagnosed, intermittent and unpredictable.

• You’ve been in and out of the shop several times and have lost confidence in your car.

Overcoming new car envy

So you weighed your options and reluctantly decided to stick with your old car. Great decision. But you find that the lure of a new car is still hard to get out of your mind. Here’s a trick to subdue the new-car craving:

Every month, instead of writing a big, fat check for a car monthly payment, write yourself a check. Think of a car you want, use a car loan calculator to see what it would cost each month, and put that money into a separate savings account.