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The Older Car: fix or trade in?

Even if you are still satisfied with your vehicle—if, in fact, the years you and your four-wheel friend have shared make her even more valuable to you—there comes a time when you must make the big decision.

Yes, that one. Do you go for that break-the-bank repair, or do you start looking for a way to put the old girl out to pasture?

While only you can determine what kind of expense or debt you can take on, most financial and automotive experts suggest you consider four factors:

  1. Relative costs. It’s usually less costly in the long run to repair than to replace, especially if you’re still making payments—doubly true if you owe more than it’s worth. The American Automobile Association offers the “50 percent rule”: if the estimate for the repair is close to 50 percent of your vehicle’s value, you should seriously consider trading up to a newer model.
  2. Reliability. What’s your tolerance level? Is this the fourth family vehicle or the truck you use mainly to haul firewood in the winter? Or do you need transportation that won’t strand you on your daily commute, break down during your eldest’s drive to college 6 hours away, or fail to start when the kids need to be at a school event or a doctor’s appointment?
  3. Safety features. If your vehicle lacks anti-lock brakes, traction control and airbags, are you sure you want your 16-year-old behind the wheel? Or the younger kids in the passengers’ seats?
  4. Depreciation. Remember, a new car loses a portion of its value as soon as you drive it off the lot. That’s what CBS Early Show’s Ray Martin likes best about “Cash for Clunkers”: the $3,500 to $4,500 credit for a new $22,500 to $30,000 vehicle immediately offsets the depreciation that occurs in the first year of ownership.

Whatever your situation, trust your service technician at any Fred Beans dealership to be your partner in these decisions.