Holding onto the car you currently have has always been considered a solid financial option. New car costs are always on the rise, and even the prices of used cars average about 75% higher than they were in 2010, according to Edmunds. Of course, keeping an older car is only financially responsible for so long. When is it time to say goodbye to old reliable?
There are a few key markers we can look for. A car that can last 150,000 miles is considered the unofficial industry standard. Assuming you drive like the average American at about 12,000 miles/year, you can expect about 12.5 years out of a car. Anything other than that is just a bonus, but again, these are just averages. They’re great tools for setting parameters on car life, but to see where you actually sit, we’ll have to do some math.
Calculate what you spend on car repairs. There comes a time when you aren’t saving any money keeping what you have. The average new car payment was $554/month during the first quarter of 2019, according to Experian. So if you’re spending less than $6,648 a year on maintaining your current car (I’d hope you would be, AAA reports the average yearly repair cost is about $1,100 for most cars) you’re ahead of the game, no matter how many miles your car has. If you’re one of the unlucky souls paying almost $7,000 to keep your car running, however, consider cashing in that clunker. It may literally be cheaper for you to assume a payment.