So, where are the geniuses who can critique my approach to this perennial question.
Trying to come up with a rational way to determine when it is better to dump an old car and get a newer (used) car.
For my 1982 Mercedes 300D, it was a matter of obsolescence. I just could not find parts anymore. But now it’s my 2002 Jeep Grand Cherokee, which has racked up several thousand dollars in repairs over the past year.
Screening by Google turns up a few sites, almost all of which say something like "ditch your old car when the costs of repairing it (either urgent repair or repairs foreseen for a given period such as a year) exceed its value (as determined by, e.g., Kelley Blue Book).
I don’t think that is accurate at all.
I would say that the costs associated with a newer car include: Depreciation, opportunity cost lost to down payment, fees and interest on loan, real maintenance costs, and some cost accounting for the fact that although a vehicle is newer there is a certain risk that it could require big-ticket repairs, just like the old one. I guess one way of assigning a value to that risk would be by basing it on the cost of an after-market warranty.
It seems to me that, financially, the point that it makes sense to trade is when the actual or predicted annual costs of repair of the old one exceed the sum of the costs of the newer one (depreciation probably being the biggest factor).