Ask MP: Should We Repair Our Old Car or Buy a New One?

by MP Dunleavey

Ask MP: Should We Repair Our Old Car or Buy a New One?

When your family’s main car is falling apart, is it better to make repairs or buy new?

Q: My family’s main car is falling apart. Should I replace it with a new or a used one?

A: For most of us, making that decision entails juggling quality-of-life desires against how much cash we want to spend. Only you know how much that new-car smell matters to you, so let’s talk about the costs, both immediate and long-term. A new car will have higher up-front costs (e.g., the down payment and the monthly loan payments), depreciate more quickly, and cost more to insure. But you’re likely to have lower maintenance and repair bills, especially in the first few years. A used car can be purchased outright, or for a smaller loan (i.e., your monthly payment is likely to be lower), will depreciate slowly, will cost less to insure, and will probably have higher maintenance and repair costs.

How does that all add up? According to, a good source for car values, a $20,000 new car is likely to cost about $32,000 in total out-of-pocket expenses at the end of five years; a used car bought for $10,000 is apt to cost about $18,000 total. Using those numbers, a used car would save about $2,800 per year. But a new car will be worth a great deal more than a used one after five years, so that figure would actually be closer to $1,800 (and some of that savings would go toward the inevitable repairs). Bottom line: Is that new-car smell worth spending an extra $1,800 a year?

MP Dunleavey, our Mom Squad financial expert, is the author of Money Can Buy Happiness and mom of a 3-year-old. Send her questions at