When customers bring out-of-warranty cars in and get a large estimate for repair, they often talk about selling instead of paying to fix the problem. That first out-of-pocket bill can be a shock. But while repair costs are not always as predictable as a car payment, they are usually 66% to 75% less costly than purchasing a new car.
For example, if you purchase a new German car for $70,000, financed for 5 years at 2.9% interest, you will make payment of $1,255 per month or $15,060 per year! Once the car is beyond its 4-year, 50,000-mile warranty and paid off, the only cost will be maintenance. Annual repairs will cost between $3,000 and $5,000 per year or equal to 3-4 car payments. While it’s always nice to have a new car, fixing a used car will save you between $10,000 – $12,000 per year, money you could potentially put into modifications.
Don’t let the sticker shock of a big repair bill scare you into purchasing a new car. It’s usually cheaper and more rewarding to hold onto the car in the long run.