The Old Car
It is distressing to me when my clients have to decide if an old car is worth fixing. I have seen this recently with two different 4-door sedans: both domestic, approximately 10 years old, with new sticker prices of approximately $20,000. (I’m approximating to make the numbers easy).
Cost of depreciation, if we say both cars are still worth $2000 on the used car market (this may be optimistic), would be $18,000 over 10 years. Almost $2,000 per year. This isn’t counting the cost of financing the car which most people do.
Both cars, I’m sad to say, were poorly maintained and thus were hard to spend repair money on because, let’s face it, we don’t know how long our investment in keeping this car alive will pay-off before the car needs some other life-saving repair.
If these cars were well maintained it would be realistic to expect another 5-10 years of service from them. This could as much as double their owner’s return on investment. Basically meaning that maintaining your vehicle can, roughly, double your return on investment.
This is before considering other savings including insurance costs, registration costs, property taxes, etc. You also save financing costs since you own the vehicle and because you maintain it you have repair savings that typically approximate $1000 per year (according to industry experts).
Finally consider the difference in your day-to-day driving when you are driving a well-maintained vehicle vs. one that isn’t. Safety, reliability, and even the aesthetic enjoyment of the ride aren’t easy to put a dollar-value on but are still important.
It may be financially fashionable to consider your vehicle a depreciating asset and thus not worth any investment. The trouble with this logic is we need our vehicles. They may cost to buy and keep on the road but unless we can get rid of this need our best survival tactic is instead to maximize our investment. There is only one way to do this: preventative maintenance.