You can’t keep a car forever. Sooner or later you will reach a point of diminishing returns and that Ford Taurus you have been driving since Bill and Hillary were in the White House will cost you more that it is worth.
But how do you avoid that money pit that develops when a vehicle drops over the edge and take the family’s finances with it? It's as easy as five simple steps:
Evaluate. Use your records to determine what it is costing you to not only maintain, but also to own, the car you are driving. Possibly the insurance premium has increased, or you know that you need a new set of tires, or that an approaching state inspection will cost a lot of money. Use Edmunds.com to establish the value of your car and use it as a reference point to evaluate your costs.
Forecast. With this information, you can forecast your cost of ownership for the next six months. Base the estimate on your car’s past repair history and expense record. Allow an additional amount for unforeseen repairs depending on the age of your vehicle.
Set limits. With your forecast in mind, commit to a maximum dollar figure for upkeep and repairs. This number should represent a firm commitment. This will prevent you from falling into the “just one more repair” mentality--which results in spending “just” $200 month after month to keep your car on the road.
Know the market. Be aware of what the car manufacturers are offering in rebate incentives, leasing deals and bargain finance rates. Make your mind up that you are in the market and be ready to act when the right deal becomes available.
Make a dry run. Even if there are no deals around, visit the dealer showrooms and let a salesperson work his magic on a deal. This will narrow down the cars that you are interested in, and inform your decision about where you would like to purchase your next car.
Surprise car repairs and expenses will always be a natural by-product of owning a car. But when your car begins to dominate your budget it may be time to realize that you might be at the tipping point of when it makes sense to move to something else. Try following these five suggestions, so you don’t fall into the trap of endless car repair bills.