BridgetBordeaux
DIS Veteran
- Joined
- Jun 27, 2008
- Messages
- 3,357
Being as this is the budget board I do want to address the common held guideline concerning the 50 percent ratio for repairs.
On an inexpensive vehicle, the ratio can easily be exceeded, but that does not tell the whole story.
In order to judge the value of the old car plus the repair we need to see how much replacing it "right now" will cost.
Let's say I get a late model car for 18k and put 20 percent down. That down payment is way more than what it may cost to fix someone's present car. The 14,400 balance will need to be financed and that will add some expense. The sales tax and title fees will add up as well. Car insurance will be more for a car with an 18K value versus one that is worth 2k to 3k. If the person's state has a "car tax" then that will also be higher.
The book value on our 2002 car with 225k miles is basically nothing. Repairs, tires, pads, oil changes, etc has cost us less than an average of 110 dollars a month for the past 3 years..............and we drive it about 20-25k per year! I don't know of many people that have a zero down/ 110 a month car payment!
In short, if someone spends (let's say) 1500 for a repair and then drives the car for another year, they will have gotten a bargain of a deal for an additional 12 months of driving. It may also give them time to set aside more money for a larger down payment when the time is right to pull the trigger on a replacement purchase .
Now if we are talking about a 7000 dollar repair on a 14000 car, that may tilt things in the other direction, but for a "low value" car the threshold of 50 percent may not really be a good guideline.
BTW...........one reason our 3 year cost is a little higher than I'd like is because it included our second 100k service which included having to remove part of our intake manifold to access the back 3 spark plugs on our V6. During this service just about everthing else was touched, like new antifreeze, trans fluid and filter, new spark plug wires, new coils, etc etc etc. All of this effort is part of why the car has been so reliable for us. For people that drive less than we do, the "big" service does not come up nearly as often!
On an inexpensive vehicle, the ratio can easily be exceeded, but that does not tell the whole story.
In order to judge the value of the old car plus the repair we need to see how much replacing it "right now" will cost.
Let's say I get a late model car for 18k and put 20 percent down. That down payment is way more than what it may cost to fix someone's present car. The 14,400 balance will need to be financed and that will add some expense. The sales tax and title fees will add up as well. Car insurance will be more for a car with an 18K value versus one that is worth 2k to 3k. If the person's state has a "car tax" then that will also be higher.
The book value on our 2002 car with 225k miles is basically nothing. Repairs, tires, pads, oil changes, etc has cost us less than an average of 110 dollars a month for the past 3 years..............and we drive it about 20-25k per year! I don't know of many people that have a zero down/ 110 a month car payment!
In short, if someone spends (let's say) 1500 for a repair and then drives the car for another year, they will have gotten a bargain of a deal for an additional 12 months of driving. It may also give them time to set aside more money for a larger down payment when the time is right to pull the trigger on a replacement purchase .
Now if we are talking about a 7000 dollar repair on a 14000 car, that may tilt things in the other direction, but for a "low value" car the threshold of 50 percent may not really be a good guideline.
BTW...........one reason our 3 year cost is a little higher than I'd like is because it included our second 100k service which included having to remove part of our intake manifold to access the back 3 spark plugs on our V6. During this service just about everthing else was touched, like new antifreeze, trans fluid and filter, new spark plug wires, new coils, etc etc etc. All of this effort is part of why the car has been so reliable for us. For people that drive less than we do, the "big" service does not come up nearly as often!
