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Is it really cheaper to keep your car at a certain point?

Tried to find this in a search but no luck so apologies if it has been asked before. I have a 2007 Impreza Outback Sport. 98,000 miles. Needs new brakes, including rotors in the next couple of months, timing belt at 105,000. Car runs great with no other problems. I drive 25,000 or so a year, mainly highway. I’m debating trading it in for the 2012 version. I’ve always assumed keeping a car is saving money, but is it really? With those repairs, the loss of value once you get over 100,000 (dealer said he’d give me 6,500 now and 5,000 if it got to 105,000 and so forth). That means in a year or two I’m really down in a trade in value combined with future repair bills so where is the line to draw that it actually is more cost efficient to get the new car?

6,500 now and 5,000 if it got to 105,000 and so forth<<<

 Your mistake is the "so forth" part.  You've already used up most of the depreciation on your $25,000 car.  If you mistakenly assume that from this point the car will decline in value bu $1500 for every 7000 miles you drive, you will arrive at a value of 0 at 128,000 miles, which is ridiculous. 
 Additionally, things like brakes are not repairs but maintenance.  Every car will need new brakes.
 Buying a new car will reduce your repair costs, but start the depreciation clock all over again, plus you'll pay sales tax (most states), higher excise tax (most states), and possibly higher insurance.  You'll still need to do oil changes, replace tires and brakes, etc.
 The economics are clearly on the side of keeping this car.
 On the flipside, why are you basing your car's value A. on trade-in rather than private party sale, and B. on one guy's offer?

You would be a fool not to keep it.

You do not have repairs–you have routine maintenance.

You will lose a LOT more $ than the cost of maintenance the instant you drive a new car off the lot.

Trade-ins are very lucrative to a car dealer. If the “trade-in” quote is $6500, you can probably get $8500 by private party sale on Craigslist, Cars.com, etc.

Until you get to big-ticket items (transmission, engine, that kind of thing) it is cheaper to keep it. A rough estimate on depreciation is 20% a year for many vehicles, so that new Impreza is going to lose a lot more $$ value the first year you own it than your 2007 will. And maintenance costs are small compared to the cost of buying and financing a new car.

If you just want a new car, fine, but don’t think you’ll be saving money.

In general, it is nearly always cheaper to keep an old car. In your case, it is absolutely cheaper to keep it - just not as much fun.

When comparing cost of ownership, never forget to factor in:

  1. ~$500 a month car payment on the new car
  2. Higher license fee on the new car
  3. Higher insurance on the new car
  4. Higher depreciation per day and per mile on the new car.
    The longer you put off that new car purchase, the richer you will be 10 years from now.

Since I got married 30 years ago, I have driven each of my cars 275-300k miles, and sold them because I was tired of them rather than because of repair costs, and my total cost per mile is probably lower than that of anyone I know.

There is something to be said for the satisfaction of driving a shiny new car with no spilled milk in the carpet and no door dings, and there is comfort in driving a car with a bumper to bumper warranty so you don’t worry about unexpected repair costs, but don’t kid yourself into thinking those things are rational reasons to buy a new car, unless you have plenty of money that you don’t need.

I want to echo what the others have said.
The OP is confusing maintenance with repairs. All cars require maintenance at certain intervals, and if everyone got rid of cars simply because they are due for maintenance, we would see a whole lot more people in dire financial straits.

As long as you maintain this car at least as well as the manufacturer specifies, it most likely has another 100k miles of good service left in it. On the other hand, if it has not maintained properly, then its best years are already behind it, and it will soon turn into a money pit.

Has the car been maintained at least as well as is specified in the Subaru Maintenance Schedule? If it has, then I would advise you to keep maintaining it and to keep driving it.

“…so where is the line to draw that it actually is more cost efficient to get the new car?”

You’ll find the line when your car is no longer able to run unless you must pay thousands of dollars worth of needed repairs. Even then, it is still not cost-efficient, merely buying your way out of a sad situation.

Keep your present car. As long as it is reliable you are making the sound economic choice. This strategy pays out even more if you are able to make light repairs yourself rather taking the car to a mechanic each time for routine maintenance and minor malfunctions.

You seem to be forgetting about the depreciation of a new car, which is far higher than the depreciation of your current car plus all of the maintenance needed now.

Expected annual cost of repair and maintenance doesn’t keep going up every year that you keep your car, it levels off after about 5 years. Some years will be more expensive than others, but in general the cost of keeping the car on the road levels off.

The advantage of keeping an older car is that the annual depreciation of the car gets smaller and smaller every year. This “expense” is usually ignored by most people, but can dwarf repair & maintenance costs.

A new Subaru probably costs an owner $4,000 per year in depreciation. $3,000 per year for a 2-3 year old car. $2,000 per year for a 3-4 year old. Your Subaru is now costing you less than $1,000 per year in depreciation. Pretty soon you’ll be down to $0, like my 22 year old and 9.5 year old cars.

Your question, simple on the surface really takes a lot of analysis to answer. And, the answer is different for different car models and brands as the rates of depreciation on cars vary.

As a car ages the costs of repairs and maintenance goes up; tires, brakes, shocks, and timing belts, are all things you “expect” to wear out in time.

As the car ages its yearly depreciation drops off considerably. Your '07 is 5 model years old. The 1st year it depreciated about 20%, but in year 6 the depreciation is about 6%. 20% of $25K is $5,000, and 6% $8,000 (est. of current book value) is $480. In terms of depreciation costs, the old car is $4,500 less for you to drive this year compared to buying a new $25K car. $4,500 can buy a lot of repairs and lots of brakes, tires, etc. The depreciation of a new car in the 2nd year isn’t a lot different than year one, so these costs are similar in the 2nd year of new car ownership.

The real question is not just about $$$, there is a convience factor. It isn’t convienient to have a car break down on you. It isn’t convienient to have a car “out of service” for repairs more often. Some folks can tolerate this inconvience more than others. A sales rep. with a tight schedule and lots of appointments might have little tolerance for down time. A teacher with a second car might be able to handle the down time on one car with little problem. Where you stand on this is a question only you can answer.

Lastly, most cars are bought not out of need, but because of an emotional “want”. If your car gets you from point A to point B that is really all any car does. But if you feel better driving a new Impreza to point B than you do in your current old Impreza the question is how much are you able and willing to pay for that “feeling”? The Mazda Zoom Zoom, and just about all car advertising is about the great feeling you get from the new car and the envy of all the neighbors, and of course all the sexy girls that will be eager to step into your new car.

Bottom line the new car will cost you $4,500 in depreciation more than your current car. You will also pay $1,750 in sales tax on a new car. That’s something just short of $6,000 a year. If $6K is no biggie, get a new car. If $6K is a lot, or you’d rather spend it on something else keep the '07.

We should all keep in mind that someone must be trading in late models for new in order for their to be late model used cars available at bargain prices for those of us who find them attractive. One man’s trash is another man’s treasure, as they say.

Florestamaria, things like brakes, rotors, and timing belts are maintenance items. Don’t you think that if you buy a new car, you will have to maintain it as well? Trading in a car because it needs maintenance is very expensive.

Keep the 2007, as of now you only have to pay for standard maintenance. I’ve just recently broken an axle on my 30 year old suburban… So far in the last 2 years, I’ve replaced a water pump, 2 tires and now the axle for a cost of $550. (used tires). Plus since I drive a diesel, it’s slightly noisy, but I get 31-33 miles per gallon. So, I’ll stick with it. The new diesels don’t get as good milage… and I can still haul a trailer and 7 passengers.

Thanks all. First off I do like my current car (a lot) and it’s not the new car feel or anything like that - the new Impreza has better gas mileage, that’s why I was looking at waiting. I don’t think I was thinking through it as fully as all of you suggested as far as depreciation, etc. and it’s clear, financially I would save money. The Subaru is my first new car, so it’s unfamiliar territory on when to trade in.

Part of this Uncle Turbo hit on as well as my father’s voice in my head saying driving a car over 100,000 is taking too big a risk for breakdowns (though cars are much less apt to do that these days, don’t you think?). I live in the NYC metro area and on occasion drive at night out of the city to where I live and in NJ in some sketchy areas after teaching. So part of it is a bit of the fear factor, though I’ve kept the car in great shape - all scheduled maintanence, etc.

I guess I might give it another year and re-evaluate then as it does seem silly to give up a car that is working fine. It’s just that I will be dropping $1500 in the next several months between the brakes and timing belt so, before doing that, I thought I should think through the whole thing.

Think of 200,000 as the ‘new 100,000’ for a well-maintained car. They are more reliable now than in your dad’s day. Have you been keeping up the Subaru-specified maintenance religiously?

Keep it! Tom and Ray always tell a caller that $500 per month payments times 12 is $6000 plus the higher insurance costs.

It’s illogical to expect the Subaru to incur $6000 in REPAIRS each year from now on. Industry practices Life Cycle Costing, and add the total annual cost of fuel, maintenance, repairs, license, depreciation, etc. and compare new with existing. Existing usually wins, even though business also adds the cost of the outage in terms of lost production.

We have a perfectly good 17 year old Nissan which at the present usage rate, will go another 5 years at least and run considerably cheaper than the annual cost of a new one. So we keep driving it until: 1. It becomes unsafe, 2. It becomes unsightly due to excessive rust, 3. It becomes unreliable in daily use, 4. It fails an emission test, and 5. The annual cost to keep it running EXCEEDS the average annual cost of owning a new car! Option 5 will likely never occur in the next 5 years.

As stated, your car has another 100,000 miles of good drivng left in it. Keep it and maintain it well.

100,000 miles is nothing these days. Cars don’t break down at the rate they used to. Usually they give you some warning that something is wrong long before it stops running. Breaking down at night in a bad location is just a fear tactic that a salesman might give you to waste thousands of dollars. I’ll bet half the cars on the road today have more than 100,000 miles on them. Both of mine do.

Keep up on your fluid changes and maintenance (especially the all-wheel-drive system) and keep your tires rotated and all the same diameter.

texases: “Think of 200,000 as the ‘new 100,000’ for a well-maintained car. They are more reliable now than in your dad’s day.”

I was about to say the exact same thing.

The major advantage to a new 2012 Impreza is its incredible MPG for an AWD. It will achieve 36MPG highway instead of the prior and absymal 26MPG. Also the 2012 uses a timing chain (no $600+ replacements) instead of timing belt.

Subaru is debunking those who says AWD and Subaru cannot get decent MPG.

It may be a good time to trade up for someone who goes 25k miles/year. If you have not done much maintenance besides oil changes for sure I would at least consider the trade up.

If maintained look hard and long at everything.

At the value of your current car, I’d also suggest keeping it if it’s been maintained properly and there are no high end repairs (motor, transmission) that need to be done. Even if you decide to get the new car you should sell the old one and negotiate a deal on the new one. If you trade in the old car you’re getting $6500. off the sticker price. I’m not familiar with Subaru’s markup, but on most makes if you are buying straight out (no trade) you can at least talk them off the sticker price by a few thousand dollars. If you sell it for say $8000. (just an example) and you could negotiate $3000. off of the sticker price (just another example) you have $11000. going against the sticker price as opposed to the $6500. the dealer is offering for trade in. A savings of $4500. I negotiated the price of a Mercury Grand Marquis in 2004, the sticker price was slightly over $25,300. and when I finished negotiation I was down to $15,300. A savings of $10,000. just for talking. These numbers are probably not realistic for an imported vehicle, but are very realistic for american made cars if you will hold out long enough on the purchase.