It is Not Just About Repair Bills When Considering Whether To Keep An Older Vehicle On The Road Or Buy Newer
The decision to continue to nurse an older car, or to finally take the plunge and purchase a newer one is not as clear-cut as most people would prefer. Beyond just repairing the older car, the true cost of continuing to drive it involves more than just tallying up all the bills.
To gain a clear understanding of what you will be truly paying, and what you may be paying for in the future, you need to look at the entire picture. Some costs are obvious, others occur over a period of time and can sneak-up on you before you realize the total cost of owning an older car.
The Obvious, Yet Less Than Obvious, Costs That Build-Up
All older cars require more frequent maintenance than newer models, and parts will eventually begin to wear-out, and fluids will need to be changed more often. Systems that were functioning properly for years will eventually need to be replaced.
Oil changes are becoming increasingly important to consider as engines grow older. Where oil changes may have been done at 10,000km for newer cars, once you’ve exceeded 150,000km, oil changes may now need to be completed at 5,000km, or even less. Oil changes are no longer a simple, inexpensive process; the increased number of oil changes results in significant additional expense.
Wear items (brake pads, brake rotors, tires, batteries, wiper blades, air filters, etc.) are also subject to scheduled replacement, and although individually they are not expensive, collectively they create the impression that the car is in need of constant repairs.
What makes these scheduled replacements so frustrating is that they occur more frequently as cars grow older, and independent of the car’s age, the same types of scheduled replacement costs occur in a similar manner. For example, a ten-year-old car may need new tires every three years; however, a twenty-year-old car may need new tires every two years due to the car being driven differently, or possibly due to suspension issues creating uneven tire wear.
The Unexpected Repairs Which Are Most Damaging
Although the above costs are difficult to budget for, the unpredictable nature of repairs is where older car ownership truly gets expensive. While you thought everything was working properly, an item breaks and you are left to wonder if the car is still worth keeping.
Alternators fail. Starters quit. Water pumps leak. Radiators crack. All of these items are not wear items that can be predicted accurately. Instead, they represent a component reaching the end of its useful life, and the useful life of a given component is influenced greatly by how the car was driven/maintained during its useful life.
As mentioned above, the cost of repairing these failures is influenced greatly by the type of part(s) you use for repairs. Genuine parts purchased from dealerships can be very costly, and make otherwise relatively inexpensive repairs unaffordable. However, non-genuine parts sourced from an independent mechanic, or salvage operations such as Tony’s Auto Wreckers, can bring repair costs down to a level that is both reasonable and reliable.
However, the negative aspect of unexpected repairs is that they seem to occur in clusters. For example, a car that is over a certain age will see multiple system failures occur within a short time frame. In the example above, the alternator fails in March, the power steering pump fails in June, and by September you are having to replace suspension components. Although each failure is relatively minor, a series of four major failures in a twelve-month time frame could easily result in expenditures exceeding several thousand dollars.
Hidden Costs Most People Don’t Understand
In addition to the previously mentioned costs, fuel efficiency decreases with age. Although the decrease in fuel efficiency is typically slow and not noticed immediately, a vehicle that was once able to achieve 7 liters per 100 kilometers may be consuming 9 liters per 100 kilometers after years of wear on the engine. Over a period of one year, the difference in consumption between the original fuel efficiency rating and current fuel efficiency rating equates to a considerable sum of money.
Insurance premiums can vary. Older vehicles are less expensive to insure comprehensively because they are worth less, however, if you are only insuring for third-party purposes, you will not benefit from the reduced premiums associated with older vehicles. In fact, some insurance companies charge more for older vehicles because they are statistically more prone to claims.
Registration and inspection costs remain relatively consistent or increase over time. Older vehicles are subject to more frequent safety inspections in some jurisdictions and are more likely to fail these inspections, necessitating repairs prior to registration.
Lastly, there is the "time" cost associated with maintaining an older vehicle. Older vehicles will breakdown more often resulting in more time spent at the mechanic, more time arranging alternative transportation, and more time dealing with the inconvenience associated with the breakdowns of an older vehicle. As previously stated, the time cost associated with maintaining an older vehicle is not listed on a financial spreadsheet, however, it is a cost nonetheless that impacts your quality of life.
Does the Math Work Out?
Despite the various costs associated with maintaining an older vehicle, for many people, the math works out in favor of continuing to maintain their older vehicle for a few more years. The reason for this lies in the fact that the cost associated with car payments on a newer vehicle ($400-$600/month) far exceeds the annual costs associated with maintaining an older vehicle ($3000-$5000). Additionally, the increased insurance premiums associated with financing a new vehicle and the immediate depreciation associated with purchasing a new vehicle further increases the cost of a newer vehicle.
As long as the older vehicle is worth more than the cost of repairs, it is likely cheaper to continue to maintain the older vehicle than it would be to finance a newer vehicle. As long as the cost of repairs continues to exceed the value of the vehicle, it is likely best to sell the vehicle and purchase a newer vehicle. Ultimately, the determination of when it is financially advantageous to sell an older vehicle and purchase a newer one is highly dependent on the overall condition of the vehicle, and the estimated cost of repairs needed to maintain the vehicle.
The Turning Point
There will come a point in time where an older vehicle will no longer be financially prudent to maintain. Typically, this is not a single catastrophic repair, but rather the cumulative effect of several problems that arise simultaneously.
Once you are faced with multiple expensive repairs at the same time, that is typically the indicator that the time has arrived to let the vehicle go. Examples include, when you are experiencing transmission slip, oil leaks from the engine, and the air conditioner has ceased operation, repairing all three systems at the same time may cost more than the vehicle is worth, and/or more than a good used replacement would cost.
Another factor to consider is rust damage. Rust damage is a significant problem to overcome, especially once it has progressed to the point of structural damage to the vehicle. Although mechanical repairs can be performed, and structural damage can potentially be repaired, once the vehicle is structurally compromised, repairs become cost prohibitive and/or impossible to perform in a manner that allows the vehicle to remain road worthy and safe.
Finally, safety considerations are an important consideration in determining when to sell an older vehicle. Modern vehicles have safety features that are designed to protect occupants in the event of an accident, whereas older vehicles lack these safety features. If you are placing family members in a vehicle that lacks essential safety features, such as stability control and/or adequate air bags, the financial analysis becomes secondary to the safety of the passengers.
Making the Right Decision
The reality of the situation is that most people will continue to operate an older vehicle beyond the point of pure financial viability, but not necessarily for poor reasons. There are benefits associated with operating a vehicle that has been fully paid-off, and with a known history, and that does not have monthly payments that can hang over your head.
Ultimately, the right decision will depend on your ability to realistically analyze the costs of maintaining an older vehicle. Consider tracking the repairs to an older vehicle for a year or two, and add up all of the costs, including the hidden costs, and compare that to what you would pay for a comparable vehicle (including the total cost of insurance, registration, and loan payments).
For many people, the financial equation will work out in favor of maintaining the older vehicle for at least a few more years. The key is being honest about what those repairs are actually costing, and recognizing when the balance tips from sensible economy to throwing good money after bad. There’s no shame in driving an older car as long as it’s safe and the numbers make sense. But there’s also wisdom in knowing when it’s time to move on, before you’re left stranded or facing a repair bill that exceeds what the car is worth by a significant margin. The decision ultimately comes down to understanding your own situation, your budget, and your tolerance for the unpredictability that comes with keeping an aging vehicle on the road.