Have you ever needed a car repair that cost you hundreds of dollars? Or maybe even a couple of thousand dollars? I sure have. It can happen pretty easily too, with the prices of parts and labor being what they are.
It can be frustrating and inconvenient, and it’s even worse if you don’t have the money to pay for what you need.
Getting a new car instead can be tempting
That’s probably exactly the point at which you’ll wish you had a new car. It sounds so good, right? Instead of constantly paying for repairs and maintenance, you can just get a comfortable, nice-looking new car. It’ll have a bumper-to-bumper warranty, so you (supposedly) won’t have to worry about a thing.
According to this article on Dave Ramsey’s site:
Recent statistics show that one-third of car buyers sign up for a six-year loan at an average interest rate of 9.6%. Among these buyers, the average price of the car is just over $26,000. This means that one-third of the cars you see on the road are dragging a $475 payment behind them.
So those people have essentially traded the possibility of some several-hundred dollar repairs for the certainty of 72 several-hundred dollar payments.
That makes no sense.
When replacing a car makes sense
There absolutely are times when replacing a car makes sense. To my of thinking, that’s when:
Your car really is breaking down all the time (as opposed to it just feeling like it’s always breaking down)
You’re not confusing maintenance (new tires, alignments, brake jobs, clutch, timing belt, checkups) with repairs (your radiator springing a leak, for example)
You just want a different car
But they only truly make sense if you’ve got the money to pay for that replacement car (after selling your current one).
Paying cash for a car
“But I can’t afford to just buy a car outright!” you may say. And, well, maybe you don’t have that kind of cash just sitting around, waiting to be spent on a car. I know I don’t.
But, I’d argue that if you don’t have the cash to buy a car outright, or to pay for repairs, you also can’t afford to be spending hundreds of dollars a month on a car payment.
But you can get your current car fixed now, and then start setting aside whatever you’d thought you could afford in monthly payments into a replacement car fund.
You can either keep that up until you can afford to pay cash for the car you really want, or until you’re able to at least buy a better car than what you have now. (And then rinse and repeat, til you get the car you really want.)
Patience is key
If you want to get ahead and get out of debt, you’ve got to be patient. I know it’s no fun. I’ve never heard anyone say, “Oh I’m so happy to wait for something I want right now!”
I’ve certainly never said that myself. But I have heard people say that they’re so glad they don’t have a car payment anymore. And I’ve heard many people say that it’s worth the time and effort it takes to get out of debt. In fact, I’ll say that it’s AWESOME, and I’d do it all again in a heartbeat.
So do what’s best for you financially long term.