Reader Question: Spend Money to Repair a Gas Guzzling SUV or Sell And Get a More Fuel Efficient Car?

Posted April 19th, 2012 in Cars by Jeremy Waller

This week I received an e-mail from one of the PF Whiz readers:

We are at a cross road dilemma to purchase or repair. Our gas hog Acura 2005 MDX, with 107,000 miles needs new a timing belt & other minor repairs. The cost estimate is $2800. This car only takes premium unleaded. Cost at the pumps is a major factor in California.

My question is, would it be wise to purchase a more gas efficient vehicle such as a Honda or Chevy which gets at least 30 mpg? Currently we are getting 15mpg in the city, 19 mpg on the highway.

Anxiously awaiting your advise.

Thank you,

Mary Lou

Hi Mary Lou –

I’m sorry to hear about your repair bill. I think I would faint if my mechanic told me that my car needed $2,800 in repairs. Have you talked to any other mechanics to see if you can get the repairs done for less? $2,800 sounds high for a timing belt and other minor repairs.

Is the car still drive-able without doing the repairs? If so, do you think you would be able to sell it without doing the repairs? Even if you had to discount the car $2,000 under market value because of the mechanical issue, you would still come out ahead by not doing the repairs. If you can’t find a buyer, then you’ll likely have to foot the bill for the repair and then you can sell the car.

Regarding the gas issue, it really depends on how much you drive. Assuming you’re average, about 15,000 per year, then you’re using around 80 gallons of gas per month. At $4.30/gallon (for premium) you’re spending $344 per month on gas. With a more fuel efficient car, say 30 mpg on average, you would use 40 gallons of gas per month. At $4.00/gallon (for regular unleaded)  you would spend $160 per month on gas. That saves you $184/month. That’s $2,208 per year. That’s not an insignificant amount.

If I were in your shoes, I think I would sell the car. First, I would get bids from a few other mechanics to see if I could get the repairs done for less. Then I would try to sell the car at a discount (disclosing the mechanical issue) – but don’t discount it more that what it would cost to do the repairs.

If you can’t sell it, then pay for the repairs out of pocket and then sell it. Market value for that car should be $11,000 – $12,000. Take the proceeds from the sale and pay cash for a more fuel efficient car.

My general rule of thumb on used cars is 4 years old with fewer than 60,000 miles. That gets you past the bulk of the depreciation, but there is still a lot of life left in the car.

Hope that helps.

What would you do if you were in this situation?

My Car Was Totaled Today

Posted April 4th, 2012 in Cars by Jeremy Waller

Oh man what a rough day.

I lost a good friend today. My beloved jeep was totaled in an accident.

I was driving to my office today the same as I’ve done every week day for the last 5 years.

About 3 miles from my exit, 2 dogs ran onto the road.

Unbeknownst to me the car behind me was following too close.

I slammed on my brakes to avoid hitting the dogs and the car behind me slammed into me.

The first thought that ran trough my head was “Oh no! I hit the dog!”

But, I quickly realized that I had been rear ended.

I pulled over to the side of the road, sent a text to my wife to let her know what happened and exited the vehicle to assess the damage. It wasn’t pretty.

The whole rear end had been crumpled.

The bumper was crushed. The gas tank had ruptured. The entire back end was bent down which made the top of the doors stick out about 3 inches from the frame.

Fortunately, a fire truck was right behind us when the accident happened. They were able to quickly block off traffic and call an ambulance and the highway patrol.

I walked over to check on the other driver.  She was shaken up, but okay.

The highway patrol showed up and took our information while the firemen cleaned up the debris.

Shortly thereafter, the tow trucks showed up to haul away the cars. And it was about this time my wife showed up.

After everything was cleaned up, the highway patrol officer brought the accident report over to me and informed me that the other driver’s license was suspended and that she was unable to confirm the other driver’s insurance information. Fantastic.

There wasn’t much else do to, so I got into the car with my wife and we went home.

My insurance company is working on everything now. Hopefully, they’ll work out a reasonable settlement and I can work on getting a new car.

Farewell Jeep.

Carpooling Etiquette: 10 Ground Rules To Keep Your Sanity

Posted March 6th, 2012 in Cars, Frugal Living by Jeremy Waller

The following is a guest post from Alex Kelly. Thanks Alex!

Whether it’s rising gas prices, the cost of parking or just the frustration that can come with the daily commute, there are many reasons why you may be considering forming a carpool. Carpooling, or sharing a ride with others headed to the same destination, can help you save money and wear on your vehicle.

There are two primary types of carpools: those for work and those for parents whose children participate in extracurricular activities. You can also find ride-sharing options for long-distance trips and errands such as doctor appointments and grocery shopping.

Regardless of the type, any carpool requires certain logistics and ground rules in order to work effectively. Use these 10 carpooling tips to get started.

  1. Dividing the cost. If all passengers take turns driving, then each can assume the full cost when he or she is the driver. If the carpool has people who are only riding and never driving, then you might consider equally splitting the cost of gas, vehicle wear and tear, parking and tolls. Consult AAA’s driving cost assessment to help with the math.
  2. Finalizing the carpool participants. Decide who will be carpooling and how you’ll split the driving.
  3. Coordinating pick-up and drop-off. You have several options: meeting at a central location, meeting at the driver’s house or having the driver stop at each residence.
  4. Dealing with tardiness. Establish how long the driver will wait for latecomers. A window of five minutes is generally acceptable.
  5. Deciding how often to carpool. Carpooling even a few times a week can help lessen the cost of driving and reduce stress. For passengers who have occasional obligations before or after work, a daily commitment just isn’t feasible.
  6. Etiquette in the car. One of the best carpooling tips is to discuss what is acceptable in terms of music, cell phones, food, smoking and scents like air fresheners, perfumes or cologne. This can prevent a lot of tension.
  7. Emergency arrangements. Come up with a plan to follow when the driver is suddenly unavailable. Advance notice would be best, but if it’s a family emergency or the car won’t start, you don’t always know ahead of time. Be sure to exchange contact information so everyone can be notified.
  8. Vehicle requirements. While you can’t control the cars that others drive, your carpool group may want to insist on certain standards, such as the number of seats, full coverage car insurance, cleanliness or safety features. Passengers whose cars don’t meet the requirements must be riders only.
  9. Discussing driving records. Have an honest discussion about accidents, speeding tickets and more serious offenses before you start carpooling. If any participant’s driving record is less than desirable, don’t be shy about asking that person not to drive.
  10. Agreeing on a policy for extra stops. Talk about whether you will allow time for stops on the way. It can be a great inconvenience for others in the carpool if you insist that the vehicle make unplanned stops at the pharmacy or dry cleaner.

Finally, be sure to check your vehicle insurance policy to see if it mentions carpooling. You want to be sure you have enough coverage to protect against the unexpected. If you’re not satisfied with your current insurance, consider shopping around for a better package.

Should I Fix My Car or Get a New One?

Posted January 17th, 2012 in Cars by Jeremy Waller

fix your car or buy a new one

For most people cars are a necessity. They can also be huge headache.

If you own a car it’s inevitable that you’ll someday face a stupidly expensive repair bill.

When we got married my wife drove a 1996 Eagle Talon. Don’t tell her I said this, but it wasn’t the greatest car. It was a bit of a beater. But it was paid for.

One day I’m sitting at work and I get a call from my wife.

Hey – I was driving though the intersection when my car made this loud bang and now it won’t start.

…wonderful… Continue Reading »

8 Questions To Ask When Buying A Car

Posted September 6th, 2011 in Cars by Jeremy Waller

Unlike most people, I love shopping for a car. I love the “thrill of the kill” when I win the negotiations. What I’ve learned is that you will never win the game if you go in unprepared.

It doesn’t matter if you’re buying a new car or a used car you need to be prepared when walking into a dealership.  It’s all business to them. They don’t care what kind of car you end up in as long as they sell you something and get their commission.

You need to be prepared with a list of questions. The well-informed consumer will always end up with the best deal. Continue Reading »

Leasing a Car vs. Buying a Car – Don’t Let The Dealer Scam You

Posted September 6th, 2011 in Cars by Jeremy Waller

Should I Lease or Buy a Car?

I am really excited to talk about this today because so many people are confused on how leasing a car works. If you ask a dealer about leasing a car vs. buying a car they’ll just tell you that leasing makes it so you can get a better car for less money each month. Sounds great right?  But oh how the opposite is true.

When I was a broke college student I was in the same boat. I almost ended up with a leased car my sophomore year in college. I am so glad that I never signed that lease agreement.

If you’re thinking about leasing a car, you really need to understand what you are getting yourself into. Continue Reading »