Unless you’re in the habit of changing your car every few years as standard – or keep getting offered amazing finance deals to do so – you will probably have experienced the “fix it or replace it?” conundrum.
It’s when you find yourself with a hefty car repair bill, and you ask yourself whether you’d be better off in the long-run buying a new car as opposed to paying for the required repairs.
There are usually two paths that take you into this scenario.
Whether you ultimately decide to fix your car, or sell it and get a new one, will depend on your circumstances.
What considerations do you need to make that will help you decide the best way to proceed?
Buying a new car is a great feeling, but it isn’t always a simple process.
You need to find the money to buy a new car. You need to change your car insurance. If your employer covers you for business travel you need to inform them and potentially complete even more paperwork.
Getting your car fixed will often be quicker than going through the process of buying a new one. A mechanic reporting a fault should also be able to give you a quote and timeframe for the necessary repair. In some cases, repairs will be able to be done the same or the next day. If the fault isn’t a major one and the car is still driveable, a repair can be done at your convenience.
Spend a few hundred dollars, fix the problem, and get back on the road.
Paying $1,000 to get your car repaired now might not be a big deal.
It might become a problem if you’re spending $1,000 today, another $1,000 in six months, then the same amount again a few months later.
Cars can quickly become a “money pit.” In the same way as you are better off addressing necessary major home repairs head on rather than opting for quick fixes, if your car has a problem, it’s usually better to deal with it in full rather than doing something to “keep it ticking over.”
What happens if you spend that $3,000 on quick fixes over the course of a year and then find out you need a new car anyway?
Car repairs are not all created equal.
You might get a repair bill of $500.
Equally, if you need a new engine or something equally as serious, you could easily be looking at a bill of at least $2,000, and maybe significantly more.
At what point does it become more cost effective for you to buy a new car rather than continue putting money into your current vehicle?
When you buy a new car, it comes with a warranty from the manufacturer.
Kia currently offer the longest warranty in Australia, at seven years, with unlimited kilometres. Ssang Yong also offers a seven-year warranty, but only up to 150,000 kilometres. It was reported last year that Kia is even considering extending this to 10 years should more competitors match them at seven years with unlimited kilometres.
You don’t need us to work it out for you.
If you buy a new car with a great warranty, and do your bit in terms of looking after the vehicle, you’ll never pay for car repairs again!
The technology used in the manufacture of cars is continually evolving. Every time you see an advertisement for a new car you’re probably being told about the latest safety features, or how it offers even more in comfort and convenience than the previous model.
When you buy a new car you get the latest in safety features, comfort, and convenience. Combined with your warranty, you can drive your new car with the peace of mind that you’re in a safe place but also covered in the event that anything does go wrong.
The average cost of a new car in Australia is $28,000 (Retrieved from https://www.moneysmart.gov.au/life-events-and-you/life-events/buying-a-car/car-buying-in-australia).
It would be highly unusual to receive a repair bill of that size for your car. However, as we saw earlier, regular car repairs can quickly add up, so it’s a judgment call for yourself at what point buying a new car starts to make more sense than repairing your current vehicle.
You also need to sort out your insurance, potential employer paperwork, and the dreaded family politics.
What’s the best solution for your circumstances?
At NOW FINANCE, we understand that it might not always be as easy as choosing between a repair and selling your car to buy a new one.
We also know that you might have little choice but to pay for repairs, but need to find the cash to get these done.
Whether you need cash to cover the cost of repairs, or to help you to buy a new car, we may be able to assist you. We offer personal loans for the purpose of covering car repair costs as well as for buying a new car, at an interest rate that reflects your credit history and financial behaviour.
Get your rate before you apply for your loan, with no impact on your credit score or obligation to proceed if you’re unhappy with the rate offered.
Disclaimer: This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs. Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.
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