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It would be nice to just be able to run down to your favorite car dealership and buy a brand new car the first time your old one needed service after the warranty expires. However, since brand new vehicles are the second largest purchase next to a house, you likely want to get all the untroubled miles you can out of a vehicle before trading it in or selling it.
Then, if you are like some who run a vehicle until it dies, you need to know when it is financially sensible to make another repair or just scrap your old car.
It is important to remember that there is both a time limit as well as a mileage limit on most warranties. Even if you have an old car that you are not racking up the miles on, your warranty may have expired or be near it. This applies to used cars that are bought and still under warranty as well.
The warranty on a used car with a three year or 36,000 mile bumper-to-bumper coverage that is still in effect starts at the date of original purchase of the first owner. Even if your main warranty expired, you may still have significant powertrain coverage for more years and miles. Only having to pay a deductible can save a lot over having to pay a higher monthly payment on a new car.
Here is where you consider possibly paying for a major repair out of warranty or going back to making a monthly car payment. This is where priorities come into play. Do you really need a new car even though you need to plunk down a wad of cash to fix the transmission or do an engine overhaul on your old car?
The upfront cash to pay for a major repair is significant, but how much is it if you divide it into the monthly payments you would be spending on a new car? Fixing your old one may equal the equivalent of three or four monthly payments on a new car. However, if you get another year out of it, you are ahead by saving eight or nine payments you would have made if you scrapped your old car and bought a new one.
One of the best reasons to scrap an old car and buy a new one is the new safety innovations that become available year after year. Many new car models will have backup cameras as standard equipment by the 2018 model year. New cars can be purchased that will automatically stop your car to prevent a frontal collision.
There are lane departure warnings and even warnings of things behind you and cross traffic hazards when backing out of a parking space or driveway. Better airbag systems provide better passenger protection. Look at the tech your old car has as compared to what is available now to keep your family safe. Maybe the investment in a newer model may be prudent.
Some owners do not turn in fender-benders when no other vehicle is involved to avoid an insurance claim because of a fear of increased policy rates. There have been plenty of dents caused by impacts with trees, posts, concrete parking lot lamp pole bases, vandalism, hit and runs in parking lots and more. They can make your otherwise decent car look ugly and make you want to buy a new one.
If you have an old paid-off car that you reduced insurance on to not cover any body damage, then you would be responsible for paying the entire cost. However, many body repairs from Cascade Collision Repair and similar companies are very reasonably priced. Though not recommended, you may even consider after-market rather than OEM parts for body repairs on your car if it is old and you want to save money.
If you still have collision coverage, then calling your insurance company to discuss your deductible and learn whether or not a rate increase would be expected for a claim can be helpful in making a decision to repair or scrap your car for a new one. A collision repair center that works with your insurance company is also helpful.
Get out a tablet and a calculator, and run the numbers. Compare the cost now to make a repair and how long you expect to be able to use your car after the expense. There will come a time when the cost to repair exceeds the return of how long you can reasonably expect to still be able to use the car without incurring another major repair cost.
For example, if the engine is burning oil, the transmission is slipping, and you need the bumper and headlights replaced due to an accident with your old paid-off car, the expenses to repair are likely to outweigh the value of keeping the car any longer.