Repairing your manual transmission or automatic transmissions can cost a few hundred dollars to thousands. Often our customers when faced with major transmission repair consider purchasing a new car as opposed to repair. It is seldom less expensive to buy a new car as opposed to repairing your current car.
Here are some concerns when considering purchasing as opposed to repair;
• The average new car depreciates 22% immediately after purchase.
• Insurance and registrations fees will increase.
• Consider purchase versus repair if cost is more than 1/2 the value of the car.
• Consider purchase versus repair if cost is more than 10 payments on the new car.
Lets say you have a 2000 Toyota Corolla with 100,000 miles. The trade in value of this car at Kelly Blue Book is approximately $2,000. Your car needs transmission repairs costing $1,500. With the repair costing more than half the value of the car, your first instinct is to buy a new Corolla. The retail cost of a new Corolla is over $20,000. Maybe the math is not that simple.
If you spend $1,500 a year on repairs on the old Corolla plus $1,500 in gas and $1,500 in taxes and insurance, you have an annual operation cost of $4,500.
If you purchase a new Corolla with a payment of $350 a month or $4,200 a year. Add $1,500 in gas and $2,500 in taxes and insurance you have an annual operation cost of $8,200 and you will still owe in excess of $18,000.
Repairing the old Corolla could save you as much as $3,700 a year.