Who cares what a car is “worth”.

I’ve dealt with so many people who are like “Its a $1000 repair on a $2000 vehicle!” OK who cares.

your options:
1. Sell your $2000 car for $500, and buy a new $3000 car which will have the same problems in 6 months.
2. Fix your $2000 car for $1000.

Option 1- Your wallet is $2500 lighter
Option 2- Your wallet is $1000 lighter

Somehow people argue that option 1 is the rational choice, because a new to you crappy car is somehow better than a not new to you crappy car.

It is almost always cheaper to fix your car than it is to buy a new one. The exception is if you have a $500 car with a $1500 repair that you can replace for $500. then replace it for $500. Then you are out $500 instead of $1500.

Now of course some people say their 5 year old car with 80k miles is costing them too much, they have like 800 dollars worth of repairs (eeks!) so their solution is to buy a NEW car for $35,000 to save $800. NOT REASONABLE.

So here is when you should buy a new car:

1. When you really want one. Lets be honest, most the time we just try to rationalize what we already want to do anyway, right?
2. When your car repair is higher than it would cost you to replace the car. then replace the car. NOT when your car repair is a big chunk of what your car is worth. BIG DIFFERENCE.
3. When the car is giving you more HASSLE (time costs or fear costs) that you are willing to pay a premium to overcome. (IE when it breaks down a lot and your willing to “pay more” to have a more reliable car.

I have a friend who owns a budget dealership. He cracks up because he tells me how often people bring in a $2000 car, trade it in for $1000, buy a $3000 car in the same condition as their $2000 car that was giving them problems. He then takes that $2000 car that he paid $1000 for and relists it for $3000 without doing a dang thing to it, and someone comes in with another $2000 car that they trade in for $1000 and buy it for $3000. Its like printing money.  I don’t think he’s doing anything “wrong” with that model... he doesn’t do BHPH, its cash only, but its funny how someone elses problem always looks better than our own problems :)