Repairing vs Replacing Your Vehicle

By Chris Dekker

 

There comes a point in every vehicle’s life when it’s time to let that vehicle go. Displaying the kind of honesty that is rare in our industry, we’ve actually talked several customers out of fixing their vehicles recently, because it just wasn’t worth it. However, that point where it makes sense to put your vehicle out to pasture usually comes a lot later than you may realize! We often hear from customers that their vehicle “is starting to cost too much money”; but when we take an objective look at their vehicle maintenance costs, they’re often surprised by how inexpensive operating their older vehicle actually is.

There are many valid reasons to purchase a new vehicle. New vehicles are much friendlier to the environment, and (sometimes) offer better fuel economy. Maybe you like the feel of a brand new vehicle, or appreciate their features. However, if you’re considering replacing your 5-15 year old vehicle for financial reasons, you’d be interested to know that it almost never makes sense (from a financial perspective) to let your old car go.

Just like owning a home, keeping the second largest investment of your life – your car – operational costs a lot of money each year. These costs include:

  • Depreciation
  • Financing charges/interest
  • Maintenance & repairs
  • Fuel costs
  • Insurance & registration

 

Examining new vehicles:

Your largest expense with new vehicles is depreciation. A recent study by the Canadian Automobile Association (CAA) shows that over the first 5 years driving a $30,000 vehicle, you lose about $3.50 for every 10 kilometers you drive in the form of depreciation. Have a 20 kilometer commute to work? That’s seven dollars – each way! Depreciation costs make up most of your financing payment, and all of your lease payment.

New vehicles offer an initial break from most maintenance expenses, but by year two or three – while the car payment continues – the new vehicle starts to require maintenance as well. Some filters and fluids require replacement as soon as 30,000 km. Brakes, tires and other “wear-out” parts not covered by the warranty usually follow between 60,000 and 100,000 km. Maintenance costs are estimated to average about $800/year over the first five years of vehicle ownership.

Vehicle insurance always costs more with a new vehicle, and any vehicle that is being financed is usually required to carry full-coverage insurance.

 

Examining older vehicles:

Older, paid-for vehicles may have no monthly car payment and cheaper insurance costs, but come with higher maintenance and repair costs as the vehicle ages. Groups such as DesRosiers Automotive Consultants say that the owner of a 10 year old vehicle should expect to spend around $1100/year on maintenance and repairs. We estimate that in the real world, this number is actually much higher at between $2000-3000 per year – and this is the number that has some car owners upset.

It seems like a lot of money, but what if we told you that your older vehicle is only costing you half as much as a new one would? Take a look at this chart for comparison:

vehiclecosts

Even after we reduce the fuel economy of the older vehicle (to 10  l/100km for a fair comparison), your annual cost of driving is still almost half with the older vehicle. Think about it: if you had a chance to buy gas or car insurance for half price, you’d be all over it! Why do we look at the total cost of driving any differently? In the example above, the older vehicle owner could spend over $7700 per year on repairs before the new vehicle became cheaper to own. That’s almost impossible – it would be like replacing your engine and transmission every single year!

Today’s vehicles are built much better than in years past, and vehicle owners should fully expect at least 400,000 km of reliable service out of their vehicle with proper maintenance. Most of today’s vehicles don’t become less reliable, or much more expensive to own over time like their predecessors did. There’s nothing wrong with buying a brand new car, and we’re happy to see a longtime customer get into a new set of wheels. We just want to tell a side of the “repair vs replace” story that’s poorly understood.

Of course, keeping your older vehicle from becoming expensive or unreliable also depends on one other factor: finding a repair shop that always has your best interests in mind – and that’s where we are happy to help!

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