Repair or replace when it comes to major automotive bills?

Editor’s note: Lawyer and car-buying expert Adam Goldfein fills in for Clark Howard Monday the 19th – Wednesday the 21st of this week. Below is a summary of some of what he discussed. Visit AdamGoldfein.com for more information.

If you’re staring down a huge car repair bill, how can you decide if it’s worth it to repair or replace?

A new survey from Consumer Reports finds that 40% of people are putting off repairs these days. People find themselves strapped and can’t keep up with vehicle upkeep. As a result, the latest Polk data suggests the average age of a car is now 10 years, up from 8 years old just a few years ago.

If you defer repairs, there’s a greater likelihood that you’ll need something more expensive down the road. Second, if you lose your ride, you may lose your job if you can’t show up for work every day.

Adam Goldfein’s rule of thumb about repairs is to look at the cost and annualize it. A $1,000 repair bill works out to be $83/month. A $2,000 repair bill would be $166/month. So by the time you get to about $2,000 in repairs, you’re better off with a car payment because it’s the same money either way.

Once you’re north of $2,000 in repairs, there’s a tipping point where you’re just putting good money after bad. The old adage of “drive it until the wheels fall off” doesn’t necessarily hold true.