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.