How to Make the Smartest Financial Choice Regarding Major Auto Repairs
When faced with the need for major car repair, we must decide whether it is worth fixing the vehicle or if we are better off investing in a new car.
Extremely high interest rates, inflation, and rising car prices make buying a vehicle a more significant commitment than ever. But does spending hundreds to thousands on repairing your current vehicle make more financial sense? At Auto Service Experts, we help customers make informed decisions based on cost, reliability, and long-term value.
Before trading in your keys for a new set, let’s break down when it makes sense to repair your vehicle—and when it’s time to move on.
Times when paying for major auto repairs makes the most sense financially:
A one-time repair costs significantly less than 5 to 10 years of car payments. Here’s when repairing your car is the wiser choice:
- The cost of repairing equals less than one-half of the vehicle’s current value.
Short Answer: If a vehicle repair costs less than 50% of its total value, it’s most likely worth doing.
Example: Your car is worth $12,000 and needs a $3,500 transmission replacement—that’s a worthwhile investment, especially if the rest of the vehicle is in good condition. But if your car is only worth $6,000, and repairs cost $4,500, you’re better off putting that money toward another vehicle.
For accurate estimates of your vehicle’s value in the current market in Edmund’s or Kelley Blue Book.
Although this may seem obvious, there are times when it is best to pay for the repairs, even if the cost exceeds the value of the vehicle.
- Work Truck Repair Investment
Let’s say you’ve got a work truck—a 2005 model. It’s a little beat-up, but it gets the job done. Now, you need to replace your truck engine, which will cost you $6,000. That might put you at 100% of what the truck is technically worth, but now you have a brand-new motor.
Of course, a work truck being a work truck, you might also need a transmission down the line—that’s another $3,000. But here’s the thing: the cheapest replacement truck you’ll find right now is around $45,000. So, does it really make sense to drop $45,000 to $80,000 on a new truck when you’re just going to put it through the same heavy use?
If you’re fine with how your truck looks, investing in repairs makes a lot of sense. It’s a tool for your business, not a depreciating luxury asset. Instead of worrying about what Kelley Blue Book says, the real question is: should the company spend $45,000 to $80,000 on a replacement or put $7,000 into the truck and get another five good years out of it? And then, another $7,000 to get another five years? At the end of the day, it’s about the return on your investment.
- No-Interest Auto Repair Financing Makes It Easier
While financing means that you will have to make monthly payments for a limited time, it is a short-term commitment compared to the long-term debt of car payments. High interest rates on vehicle loans also mean that you will pay significantly more than the cost of the vehicle over the long run. Our 6-month 0% interest auto repair financing provides a decisive advantage.
Example: A $3,000 repair financed over six months is much more manageable than $500+ per month for 5+ years on a new car.
- Our 3-Year/36,000-Mile Warranty Adds Long-Term Value
You may worry about investing in a major repair—what if it breaks again? For your peace of mind, we back our repairs with a comprehensive 3-year/36,000-mile warranty on parts and labor. Our warranty covers major repairs such as complete AC compressor kit replacements, transmissions, and engine replacements.
- New car warranties typically provide 3 years/36,000 miles of complete coverage. Powertrain warranties may extend longer.
- Auto Service Experts warranty provides 3 years/36,000 miles on full coverage on major repairs, so if your car is otherwise in good shape, replacing the engine or transmission could give you years of reliable driving—without a new car payment.
- You Do not want to pay the high cost of a new vehicle or commit to long-term debt. New cars cost more than $48,000 on average. Due to the high cost of new cars, the price of used cars also remains high. That means:
- Monthly payments are often $500–$700+.
- Buyers pay more for Sales tax & registration.
- Interest costs significantly increase how expensive the vehicle really is.
- Buyers pay much higher monthly rates on auto insurance and full-coverage is legally required.
- If you want to sell your vehicle, repairing it first will get you a higher price and it will sell faster
Most people will not buy a car that needs significant repairs. However, If the repairs cost less than the value of your vehicle, you can pay to have it repaired & still make some money from the sale.
In conclusion, if your vehicle is generally reliable other than one major issue, it is often better to have it repaired and take advantage of short-term financing if necessary.
A New Car Might be the Better Investment if…
Getting your car or truck repaired usually saves you a great deal of money, but sometimes replacing the vehicle is the better option. Here’s when:
- The cost of repair is more than the vehicle’s total value
If your car is valued at $5,000 but the necessary repairs cost $6,000, putting that money toward a different vehicle usually makes more sense (unless it is a work truck.
- Your Car Has Multiple, Extensive, or Ongoing Problems
If you’ve already spent thousands on repairs and your vehicle continues to need new repairs, replacing the car may be the best way to save money in the long run.
You might be trapped in a repair cycle if…
- In the past year, your vehicle has needed several major repairs.
- Your vehicle frequently breaks down, leaves you stranded, and is generally unreliable.
- It’s repeatedly in the shop for extended periods, so you do not have reliable transportation.
- Your car or truck fails safety inspections or is otherwise unsafe to drive.
Older vehicles often lack modern safety features, and some may fail state inspections due to rust, frame damage, or major mechanical issues.
Major mechanical issues, frame damage, or extensive rust can cause a vehicle to fail state inspection.
Much older vehicles may also lack the essential safety features required by law today, such as airbags, anti-lock braking systems(ABS), and electronic stability control (ESC).
If your car has a safety issue that cannot be completely repaired, it’s time to get rid of it.
- You are going broke at the pump due to poor fuel efficiency.
If you drive a lot and your vehicle gets very low gas mileage, investing in a new, more fuel-efficient vehicle could save money in the long run.
For example: a car that gets 15 MPG costs almost twice as much in fuel as one that gets 30 MPG—if you drive often, the difference adds up quickly.
However, fuel efficiency may not save enough to justify the expense of a new car, especially if that is the only reason you are replacing your vehicle.
Say you upgrade your current truck, which gets 15 MPG, to a new fuel-efficient truck, which gets 25 MPG. If you drive 20,000 miles per year and pay $3.50 per gallon for gas, you will save $1,866.67 per year on gas.
That is a lot of money, but it would take many years to make up for the amount spent on a new truck, if ever.
In conclusion, is it better to replace or repair your broken-down vehicle?
These three questions should help you decide:
- Is a new vehicle currently (and comfortably) in my budget?
If it is not the right time to commit to a 5-10-year loan with high monthly payments and interest, investing in a repair is probably wiser. - How much will the repair extend the life of my vehicle?
It is impossible to foresee all possible future repairs, but if a new engine or transmission replacement can give you several more years of reliability, it is probably a good investment. - What condition is the vehicle in besides the repair you are considering?
If the body, interior, frame, and other mechanical systems are in good condition, it likely makes financial sense to repair the vehicle.
Have a question for an ASE Master Mechanic? Need a car repair estimate? Call us or schedule an appointment online today!
At Auto Service Experts, we help you make the best auto repair decisions for your budget and lifestyle. If you decide to repair, we offer 0% interest financing and a 3-year/36,000-mile warranty on many major repairs—giving you confidence in your investment.