Some of my most valuable life lessons I’ve learned from cars. From the outrageous monthly payments to ghastly repair bills and ridiculous insurance premiums, I know the dilemma of “Can’t live with ’em, can’t live without ’em!”
While it didn’t cross my mind while going through so many car miseries that one day my experiences might help others, perhaps that day has come. Let’s just say that what I know about this subject, I’ve learned the hard way.
Dear Mary: I’m in desperate need of some advice. After losing literally everything in a divorce situation, I bought a car about a year ago that I could pay for with cash—a 2002 Camry with more than 200,000 miles.
In the past year, I’ve spent more on repairs than I paid for the car. Every few weeks I seem to have to pay $200-$400 for repairs and that trend continues. I just found out that I need new inner tie rods and struts for the front of the car to keep it drivable and safe. Looming on the horizon is the need to replace the clutch (it’s a manual transmission) and no doubt other things, too.
At what point do you say enough is enough? I’ve been telling myself that there are only so many things that could go wrong on a car but I’m barely making it financially and if something more expensive happens that I can’t pay for with cash (I don’t even have a credit card) I’m in big trouble. I’m concerned it’ll leave me with no transportation to get to work and even worse, unable to see my kids. Thanks for what you do. Tim
Dear Tim: I am so sorry to hear of this most painful season you and your family are going through. I’m sure there are no easy answers, but I know that even this will not last forever. As for your transportation situation, this too is difficult but not impossible. You will get through this and I am confident it is going to be sooner than later.
I did a little checking using the information you’ve given me regarding your Camry and find that, generally speaking, its value is around $2,000, more or less, in its needy condition. It reminds me of my Cortina except its value was more like $200 with no choice but to keep pouring money into it.
The way I see it you have three options.
1. Sell the Camry then buy the best replacement clunker you can find with the cash you get for it. Whether you could find a more reliable vehicle for the same amount of money including applicable tax and fees is dubious, but could happen.
2. Sell the Camry, put the proceeds into savings then hunker down by taking public transportation or figuring out some kind of ride sharing. While this option may be outside your comfort zone, you end up with money in the bank and trouble-free transportation. This assumes of course that you live in an area that offers public transportation. If you are diligent to save the money you aren’t having to spend on repairs, gas, and insurance, in time you’ll have enough cash to buy a decent clunker to get you back on the road.
Related: How to Buy a Car with All Cash
3. Keep fixing the Camry. This option requires that you continue doing what you have been doing—repairing this car. Determine to learn how to make these repairs yourself with parts you can get from your employer with your employee discount. Eventually, everything will be working reasonably well and you can start saving that $200 to $400 each month rather than pouring it back into the car.
My advice is that you go with Option 3. While these car repairs are miserable right now and keeping you on financial pins and needles, I’m confident that if you just hang in and keep going, in only a few more months you’ll be feeling tremendous relief from your car repair nightmare. Then you’ll be in a position to begin saving the money you’re not spending on repairs.
For DIY auto repairs, your computer is your friend. AutoMD and Cars.com are both excellent resources for general purpose videos, how-to guides, and diagnostic assistance for the most common car problems. AutoMD also has an iPhone app with guides optimized for mobile viewing. If you need help deciding if a repair is worth your time, RepairPal is an excellent resource for checking the average cost of repairs in a shop and can help you decide if it’s worth the time and effort to do it yourself.
Dear Mary: I drive a luxury car that is now eight years old and currently worth about $20,000. Should I maintain full insurance coverage or just liability coverage? I’m paying about $210 each year for collision and comprehensive coverage with $500 deductible. Sharon
Dear Sharon: Generally speaking, the collision portion of your auto insurance coverage is there to pay for damage to your car when hit by another vehicle or when you hit an object like a pole or fence. Or when you rear-end a brand new Mercedes with your brand new Cadillac (complete with 60 of the biggest payments you can imagine) hitting it so hard it slams into a brand new Porsche on Los Angeles’ 405 Freeway during rush hour. In the center lane. Uh-huh. Stuff like that.
Comprehensive covers damage to your car from vandalism, hail, flooding, fire, falling objects, rocks cracking windshields and even the damage incurred when hitting an animal, for instance, a deer. And yes, been there, done that while on vacation. It also covers the value of your car if it is stolen and not found. Or found stripped bare and left by the side of the road. Yep, that too.
On the one hand, it is not wise to keep paying big premiums for an aged vehicle with a vanishing market value. But you are not in that position. Two hundred dollars a year to insure this $20,000 asset is reasonable.
Here’s a good rule of thumb from the insurance professionals at CarInsurance.com:
You should carry collision and comprehensive insurance under the following circumstances:
- If your car is less than 10 years old
- If your car is more than 10 years old and worth $3,000 or more
- If you could not afford to repair or replace your car if it’s severely damaged or stolen.
You would be wise to continue carrying collision and comprehensive insurance on this vehicle. Hope that helps!
On the blog yesterday: An Incredibly Easy Way to Save Money Shopping Online