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.
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.