Should you keep fixing up your car or send it to the junkyard? Here's the tipping point

So do you keep pouring money into an aging car or take on a monthly payment for something newer?

It’s a dilemma many drivers grapple with, especially now. Repair costs keep climbing and vehicle prices remain stubbornly high.

Here’s a look at the relative costs and how to make the decision that works for you.

The rising cost of repairs vs. the price of a new car

Major car repairs can be eye-wateringly pricey. Here’s a rundown of some of the big-ticket items:

• Timing belt replacement: $880 and up (1)
• New transmission: $6,000 or more (2)
• Engine replacement: $2,000 to $10,000 (3)

That’s enough to make a buyer consider getting a new car instead.

Unfortunately, the average cost of a new car hovers around $50,000.

That’s pushing 22% of buyers into longer loan terms — seven years or more — just to keep payments manageable, according to the vehicle research firm Edmunds (4).

But it’s still a stretch. Nearly one in five new cars comes with a monthly payment of $1,000 or more (5).

Used cars are somewhat less expensive, but not much, as demand for them remains high.

“The right approach is to buy the best car you can afford, whether that vehicle is new or used,” Joseph Yoon, an Edmunds consumer insights analyst, told CNBC (6). “Gone are the days of either new or used vehicles being the absolute better deal.”

That’s why many drivers keep repairing older cars longer than they might have in the past. But there’s a tipping point where repairs stop making financial sense.

When repairs are no longer worth it

A helpful starting point is to compare repair costs with your car’s current market value. If a single repair approaches or exceeds 50% of your car’s value, it’s a good time to let go (7).

First, get an estimate of your car’s value by using sources like:

• CARFAX
• CarGurus
• Edmunds
• J.D. Power/NADA Guides
• Kelley Blue Book

Let’s say your car’s worth about $8,000. So a $5,700 transmission repair would be more than 50% of the car’s value. May be time to sell it.

It’s not just immediate repairs to consider. Look at upcoming maintenance.

High-mileage cars often face predictable big-ticket items: suspension components, cooling systems, or major engine work. Planning for what’s next can prevent surprises.

Run the numbers on monthly ownership. Even without a car payment, repairs averaged over a year might rival the cost of financing a dependable used vehicle.

On the other hand, taking on debt for a new car could strain your budget if cash flow is tight.

Another important consideration? Reliability.

An older vehicle with a history of frequent breakdowns can create hidden costs: towing bills, missed work, rental cars, and constant stress.

If you depend on your vehicle for work, childcare or long commutes, a newer car might reduce unexpected costs and provide peace of mind, even if it comes with a payment.

Calculate the impact of car costs on your financial goals

The right decision isn’t always obvious.