hen should you get rid of an old car? That is the question asked by an American company GoBankingRates.com in California. The company makes the case a person should finally ditch an old automobile when, "a consumer’s car maintenance costs...
hen should you get rid of an old car? That is the question asked by an American company GoBankingRates.com in California. The company makes the case a person should finally ditch an old automobile when, “a consumer’s car maintenance costs exceed 50 per cent of their vehicle’s present value, then it’s time to make a purchase.” The study goes on to cite a Wall Street Journal statistic on the cost of new vehicles and current financing rates, implying if the cost or repair exceeds the monthly payments on a new or leased vehicle, including interest payments, it’s time to send the vehicle to the scrap heap
Murray Voth of TACT has written about this issue in great depth in February of last year (http://www.ssgm.com/news/how-to-differentiate-yourself-in-this-industry/1001964794/). If you have forgotten that piece, read it again.
What the GoBankingRates.com study does not take into account is the depreciation cost of a new vehicle over time or buying out the remainder of the vehicle cost after a lease runs out; or the cost of leasing another new vehicle if one gets tired of the current one. When you start factoring in all of those cost, keeping that older vehicle on the road becomes, in reality, the less costly option.
What is often overlooked in this kind of debate is the reason people will abandon an older vehicle for a new one is they have often not maintained that vehicle well from the start. They skip oil changes, transmission inspections and regular fluid changes. They ignore small problems that can be fixed easily and inexpensively until they become something larger and more expensive; or they ignore problems altogether until those problems result in the car not starting one day. Others try to go cheap on the maintenance and repair work. They will only get some of the needed repairs done, putting off the rest; they will try to do the work themselves in a ham-fisted manner; they will demand that the cheapest, lowest-quality parts and fluids be used on the vehicle
What people fail to understand is regular maintenance will keep a vehicle on the road for a very long time. I saw one vehicle come into a shop with over one million kilometers and it ran with the precision of a Swiss watch. The shop’s technician told me its owner never once skipped an oil and fluid change, did all needed repairs and followed the maintenance schedule outlined in the owner’s manual religiously. If the technician found an issue or recommended some needed work, this owner never said no. When I asked this owner if he planned to get a new car, he said he could not see the reason why. His car had run for over 20 years without a problem and he did not see how he could save any money by getting a new vehicle.
He is right. Even with the low financing rates available today and the low cost of some new vehicles, it still is cheaper for this fellow to keep his 20-year-plus car on the road.