If you’re contemplating buying a used car, you’re not alone if you’re experiencing sticker shock.
The average price for a used car broke the $28,000 mark at the end of 2021, according to a report from Cox Automotive, which says, “The average used-vehicle listing price was up 28% at the end of December compared with the year earlier and 42% higher than at the end of 2019.”
What’s Going On With Today’s Car Market?
Used cars outsold new ones nearly three to one last year, according to the Wall Street Journal in a Jan. 25, 2022, article.
The current car market — for new and used vehicles — continues to be inflated due to several factors including inventory issues and the ongoing shortage of the semiconductor computer chips used in them.
This article will give you some sound financial advice from money expert Clark Howard on what you should do if your car needs fixing and you’re torn between buying another vehicle or repairing your old one.
If you absolutely have to purchase a vehicle right now, Clark recommends that you buy an older, less expensive model. When the market improves, purchase the car you really want.
“You can just buy something older and use it as a placeholder until prices and supplies become more in sync,” Clark says. “Then later … you’ll be making a second purchase. That’s the only good strategy.”
But what if your old vehicle can be fixed, saving you from that “placeholder” purchase?
That’s the question a Clark.com podcast listener posed recently.
Real Life Example: My 2008 Camry Needs About $3,000 Worth of Work. Should I Repair It or Buy a New One?
Tom from California: “Here’s my dilemma: I have a 2008 Toyota Camry with 185,000 miles that needs about $3,000 worth of work, probably more than the car is worth. I think it’s time to buy a new car. This could be a safety issue, but late-model used cars now cost as much as new cars used to cost.
“New cars are also more costly, hard to come by and the selection is limited. I may have to settle for a color or equipment I don’t really want.
“Should I repair my existing car, which I know you usually would not recommend, and wait for prices to drop and availability and selection to improve or pay the higher price for a new or used car, which I may not really want, but that’s still available?”
Clark’s Take on Whether It’s Worth It To Spend $3K To Repair an Older, High-Mileage Car
Clark says: “You’re right, this is a dilemma, because I looked up the value of your 2008 Camry, and it’s right in the ballpark of what these repairs would cost.”
“So (sighs), I’m gonna say this. I’m shallow breathing saying it: Pay to repair the Camry.
“If you really can get it completely up to date for $3,000, you have very low risk going ahead and repairing it.”
“If you got another six months out it, you’re fine because the Camry would still have residual value, selling it at the end of that time period,” Clark adds.
Should You Repair Your Car or Not? Here’s How To Know
Here’s Clark’s general rule, in the current market, on whether or not to repair a car based on its value.
“If the cost of the repair is half or less than the value of the car, you should always do the repair,” he says. “If the cost of the repair is between half and the full value of the car, and if you think the car will last for another year, you should do the repair.”
To hear Clark’s full take on this question, listen to the segment:
Do you have a question for Clark? Use this form to ask him! And remember that you can listen to the Clark Howard Podcast at any time here.
If you have a question but don’t want to be included in the podcast, contact Clark’s Consumer Action Center for free money help.