End of the road?

Costs vs. reliability: Knowing when to keep or trash your old car

Car Shopping

Your Money

September 26, 2004|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

ItM-Fs a no-brainer: Counting the upfront costs, monthly payments and depreciation, a new vehicle is more expensive to own than an older, paid-for model. But money isnM-Ft the only factor in deciding when to trade in the old jalopy: Dependability, safety and common sense may trump dollars and cents. Knowing you can reach your destination safely and on time may make a new vehicle a better bet than rolling the dice on a highmileage beater.

And even when dependability isnM-Ft an issue, a lot of people just canM-Ft resist the lure of shiny new metal, especially when rebates and low-cost financing add to the attraction.

Because everyoneM-Fs finances are unique, there is no formula that says when itM-Fs best to buy a new or newer vehicle, but Phil Reed, consumer advice editor for automotive Web site Edmunds.com, gives this rule of thumb: M-tIf you had a used car and repairs were less than a monthly payment [on a new car would be], stick with the used car. YouM-Fll still be ahead.M-v

However, Reed says the decision should not be entirely financial.

M-tReliabilityM-Fs also an issue,M-v he said. M-tThe worst thing you want is for your car to die on the expressway in the middle of the night. You have to think about a new car if problems look chronic.M-v

Annoying mechanical breakdowns are bad enough, but safety-related failures can be worse, such as the brakes going out or losing power steering. Reed says a car 10 or more years old also wonM-Ft have recent safety advances, such as side air bags that protect occupants in collisions.

Ultimately, the owner has to decide whether itM-Fs worth it to sink more money into a car thatM-Fs disabled or limping along or sell it as is, which may be as scrap metal to a junkyard.

Auto insurers make those judgments when assessing the cost of repairs after accidents. State Farm starts thinking about a total loss when damages approach 75 percent of a vehicleM-Fs value, but the threshold should be lower for mechanical repairs.

Even if Old Faithful has chugged along for 10 years without major mechanical failures, the automatic transmission could stop shifting gears tomorrow, putting the owner between a rock and a hard place.

A car that doesnM-Ft run has hardly any value, but spending $2,000 to fix a transmission will not inflate the resale value by the same amount.

Reed says an owner may recoup part of the repair cost in a private sale by showing proof that the transmission was just rebuilt. He doubts it would raise the carM-Fs value in the eyes of a used-car appraiser at a dealership and could raise a red flag.

M-tIt may work against you,M-v he said. M-tMechanics will tell you that once the sanctity of the union between the engine or transmission and the car is broken, they may never be the same.M-v

Rick Popely is a staff writer for the Chicago Tribune, a Tribune Publishing newspaper.

Caution: DonM-Ft drive M-fupside downM-F

Despite all the risks of hanging on to an older car, Phil Reed, consumer advice editor for the automotive Web site Edmunds.com, advises consumers to wait until the car is paid for before buying another.

The auto business labels people who owe more than their vehicle is worth as M-tupside down,M-v and Reed says buying a new car under those circumstances M-tis just a continuation of living beyond your meansM-v and the start of a cycle that is hard to break.

M-tYouM-Fre just going to get further upside down. Basically, youM-Fre going to get buried for life,M-v he said.

Edmunds says 27 percent of new-vehicle buyers last month were upside down, owing an average of $3,700 on their old vehicles. When Edmunds started tracking in January 2002, 24.5 percent of buyers were upside down and owed $3,306 on average.

Nevertheless, a stream of enticing new models and endless incentives encourage four out of five consumers to buy new vehicles before they need to, according to CNW Marketing Research.

M-tOnly 18 percent say they need to replace their current vehicle because itM-Fs either on its last legs or will cost significant amounts for repair and maintenance,M-v said Art Spinella, president of CNW, a Bandon, Ore., firm that surveys about 3,000 customers monthly. M-tThe other 82 percent just want something new or different, or are attracted by a good deal.M-v

That is an unusually large shift from 1990, when 60 percent of consumers said they needed to replace a vehicle. In 1980, 85 percent said they bought out of necessity.

M-y Rick Popely

For some, reliability the turning point

Tim DePalma of Danbury, Conn., knew it was time to get rid of his 2000 Pontiac Montana minivan when, at 36,000 miles, the automatic transmission started to go for a second time.

The first time was at 4,000 miles, when the transmission was rebuilt under warranty.

That was followed by an engine rebuild at 7,000 miles, also under warranty.

But at 36,000 miles, the factory warranty was expiring.

M-tI didnM-Ft trust it anymore,M-v DePalma said. M-tWho knows what would go next?M-v

DePalma is an accountant and financial analyst, but he didnM-Ft run a spreadsheet before deciding to dump the Montana for a Toyota Sienna, a trade that cost $25,000.

M-tIt wasnM-Ft financial. It was totally reliability,M-v he said.

He, his wife and two children, ages 7 and 4, often take four-hour trips for skiing and other outings, and M-tI donM-Ft need having my van break down.M-v

M-y Rick Popely

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