I have a 2000 Toyota Camry which I love. It has the right features.. nothing more nothing less than what I need in my car. It has over 135,000 miles on it and still runs very good. However, in last one year I have spent approx $1500 on oil change, brake, serpentine belt, timing belt and catalytic converter.  The Kelly book value of the car is only $1700!

I am always debating on whether I need to dispose off this car and buy a new car or should I hang on to it and be happy even if I have to spend additional $2000 on repairs and maintenance.

Let us see what factors should I consider and what is the math between the two options- Buy or Keep and continue to spend on repairs.

The Math Myth

At some point, almost every car owner will be faced with repair bills. And as the bills start to add up to a large proportion of a car’s value, many owners start to figure that their car has officially kicked the bucket. But thinking that way is actually a costly mistake.

This should be considered in a different fashion.. .. At a basic level, a car’s value — any car’s value — is its ability to provide transportation. An older car and new car can both do that. The question drivers whose cars are on life support should be asking is: How can I get the transportation a car provides at the lowest cost? Once you take a car’s potential monetary value out of the equation, the math becomes clear.

Take my example where the repair cost was same or closer to the car value. Should I sell my car? No! Because while it would take about $1,500 to keep that old Camry on the road, buying a new Toyota Camry will costs about $18,000. This clears the math myth!

The Real Math

Here’s the math any car owner should do when deciding if their older car is worth keeping

Take my car example:

If I spend another $1500 and drive it 15000 miles/ year, then my total cost excluding the gas will be  $1500 plus insurance and I will not be paying any monthly lease/loan payments.

If I buy a new Toyota Camry for $18,000 then  at 4% interest rate, I will be spending approx $400/month or $4800/ year.

Therefore by keeping your car, you can save approx $2500 every year

Other Factors to Consider

If your older car is consistently unreliable and causes you to miss work show up late, or repeatedly leaves you stranded along dark highways, it might be time for a new one.

It is not surprising that people are always scared of buying a used car. Frauds in used car is becoming more and more prevalent, especially after Katrina and due to the current economy.

We have compiled tips and various red flags from different website to help you in buying a used car and avoid any possible fraud and to avoid getting ripped off.

Problem Car Title

The first step to verify the title is to check with the DMV. Usually, you’ll just need the car’s VIN number and may be charged a small fee (often these transactions require you to go to the DMV’s office). You need to make sure the VIN on the car matches the VIN on the title and the seller’s name matches the one on the title. This record check is also valuable because it will show any outstanding liens on the title, which means that the owner is still making payments on the car and doesn’t own it outright. This could complicate the sale later, especially if you’re buying from a private seller.

However, even if the title appears to belong to the seller, it could still be fraudulent. There are a few signs that may signify foul play. Play close attention if the vehicle was recently brought to your state and titled or if the VIN number on the car is obscured or shows signs of tampering. The title should look official, meaning it will be printed on special paper with watermarks (visible when held up to the light). All text, graphics and borders should be sharp, not blurred. If you can, compare the title with an original (perhaps from a friend’s car in the same state) and make sure the two look the same.

Your AutoCheck  or CarFax vehicle report will show any problem titles on the car’s record at any point in its history — everything from hail damage to fire damage. Most of these issues are red flags, but here’s just a sampling of those to avoid at all costs: Flood titles, which means the vehicle has received extensive water damage; salvage titles, which mean an insurance company has at some point declared the car a total loss due to sustained damage; and junk titles, which mean the vehicle indicate that a vehicle is not safe enough for use and the car cannot be titled again in that state.

You should always be concerned about buying someone else’s problems. Before making any deals, write down the Vehicle Identification Number (VIN) which is a 17-digit code usually located on the top of the instrument panel, at the base of the windshield. It will also be on a sticker on the driver’s-side door pillar, and in several other places around the vehicle. Make certain that all the VINs on the vehicle match! If the one on the door pillar is different than the one on the dashboard, or title, or somewhere else, then something is not correct. Leave and find another car.
A problem-free title doesn’t mean it’s valid. Criminals can create counterfeit or fraudulent titles and use them to legally register and then sell stolen cars. If you buy a car without a valid title, it’s the worst-case scenario — you don’t legally own the car you just bought.

No Service Records

One of the most important aspects of a used car is its maintenance history. You want to make sure you’re buying a vehicle that has had routine oil changes and major mileage services. Always ask the seller, even if it’s a car dealership, for all service records. If they can’t provide those for you, you have no way of knowing if the car has been maintained properly. In addition to asking for records, look for a windshield sticker indicating when the car’s next oil change is due. If there’s no sticker or it shows an oil change is past due, ask why.

Vehicle and Accident History Issues

A vehicle history report is essential for any car purchase. You can ask the seller or dealership for the report or access it yourself online using the car’s VIN (Vehicle Identification Number). AutoCheck charges $19.99 for a single report or $29.99 for unlimited reports for 60 days. The report shows accident/damage history as well as title problems, frame damage and an odometer rollback check — any of which should be deal breakers.

Mechanical Problems

Signs of Poor Alignment

Check the tires for wear. Uneven tire wear — balding on the sides or in the middle — could indicate the need for a front-end alignment or a more costly repair to a suspension component.
Bring along a small refrigerator magnet and place it gently (so as not to scratch the paint) along various body panels (lower door, front fender, etc.). If there is any plastic body filler present the magnet will not stay in place, indicating the vehicle has been involved in an accident. Stand away from the vehicle and look at its panels and seams. Does everything line up correctly?

Signs of Repainting
Open the trunk, hood and doors. Look for paint over-spray, a telltale sign all or part of the vehicle has been repainted. Now walk around the vehicle. Are all the body parts precisely the same color?

Signs of a Cracked Block
Check the radiator fluid. If it is foamy or has oil droplets in it, there is a good chance the car has a defective head gasket or, worse, a cracked block or cylinder head, any of which will cause the coolant and oil to mix together. If so, don’t buy the car.

Signs of Flood
Reach up under the car and feel around the top of the gas tank. If you find mud or leaves up there, chances are the vehicle was involved in a flood or, in the case of a sport utility vehicle, taken off-road with some frequency. You can perform the same test inside the car by carefully reaching up under the instrument penal. If you find any signs of this sort of water damage, don’t buy it.

Signs that the Vehicle is Not Local
Check the inside of the car. Look in the ashtrays and under the seats. Listen to the radio. If the buttons are all set to stations in another area, you know the car is not local.

Signs of Driver Abuse
Look at the condition of each foot pedal (gas, brake and clutch). Do the rubber footpads show heavy wear? If the steering wheel is leather, does it show excessive wear? These patterns on a low-mileage car may indicate that the vehicle has more mileage than the odometer indicates. Trust your sixth sense on this one. If you feel the odometer has been tampered with, don’t buy the car.

The Bottom Line

Checking for all these red flags may seem excessive, but they can save you time and headaches down the line. In the end, the AutoCheck vehicle history report, DMV records and seller should be consistent. If any of the information seems fishy, consider walking away from the sale. If any of the above warning signs do surface, you may not even want to give the car a second thought. It doesn’t hurt to walk away, but it can sure hurt a lot to buy a problem vehicle. Plus, with the internet, you can find virtually any car, anywhere. And as they say, there are plenty of other fish in the sea.

Car industry’s crash is bringing up great values for the consumers. With new car prices going down, the used car prices have also followed the flow. 2009 is becoming one of the best years to buy a used and a reliable car. Kipling and Consumer reports have listed various cars which are cheaper, reliable and also hold their values. You can choose from any of these based on your budget and need:

2005 Honda Civic EX Sedan

The Civic embodies Honda’s rep for long-lasting value and practicality. Its small sedan is fuel-efficient and fun to drive, and you can save almost $6,500 over the original price of the ’05.

2007 Ford Five Hundred SEL

Ford’s Five Hundred — now called the Taurus — is roomy, reliable and safe. The ’05 model won Kiplinger’s Best New Car designation when it was introduced.

2006 Infiniti G35 Sedan

This 3-series competitor offers sporty performance in a luxurious package without a luxe price. The 3.5-liter V6 produces 280 horsepower and 270 pound-feet of torque, but you don’t have to sacrifice safety or trunk space.

2005 Lexus LS 430

The LS 430 is a perennial Kiplinger’s Best in Class winner, with six consecutive titles before its 2007 redesign (when it won Best New Car). It seamlessly blends performance and pure luxury, and the ’05 costs less than half its original price.

2005 Toyota RAV4

Toyota’s small crossover consistently tops its class for its mix of functionality, fuel-friendliness and value. The ’05 won Best Small SUV in our rankings.

2007 Honda Pilot LX

The ultra-utilitarian Pilot seats eight, hauls 3,500 pounds and has 48 cubic feet of cargo room behind the second seat. You also get Honda engineering and reliability.

2006 Volkswagen Golf GL

VW’s hatchback is safe and solidly built and can haul lots of gear. The zippy 4-cylinder gets 24 mpg in the city and 31 mpg on the highway, too.

2007 Hyundai Sonata GLS

This two-time Best in Class winner is a strong competitor to Honda Accord and Toyota Camry, but with a lower price tag. Redesigned the year before, the ’07 has all our favorite safety equipment and tons of cargo space.

2006 Acura TL

Honda’s entry-luxury nameplate delivers quality and reliability. The TL won Best in Class two years running with stellar resale values, standard safety features and fuel-efficient performance.

2006 Pontiac Vibe

GM’s twin of the Toyota Matrix costs a few hundred dollars less. This grocery-getter has a fuel-efficient 1.8-liter, four-cylinder engine that gets 30 miles to the gallon in the city and 36 on the highway, and it has 19 cubic feet of cargo space.

BEST OF THE BEST

These are models that have performed well in CR road tests over the years, and have proved to have several or more years of better-than-average reliability. Listed alphabetically.

WORST OF THE WORST

These vehicles showed multiple Used Car Verdicts that were much worse than average, according to our survey respondents. They consistently had more problems than other models overall.

From Consumer Reports:
About these lists
The lists on these pages are compiled from overall reliability data covering 1998-2007 models with above-average or much-below-average reliability. CR Good Bets and Bad Bets include only the models for which we have sufficient data for at least three model years. Models that were brand-new in 2006 or 2007 do not appear. Problems with the engine major, engine cooling, transmission major, and drive system were weighted more heavily than other problems.

The full Ratings and recommendations for more than 200 vehicles, along with the latest information on thousands of other products and services, are available to ConsumerReports.org subscribers.