I agree with Alex. I think that the conventional wisdom about not spending more to repair a car than it’s worth is ridiculous. I would rather spend $1,000 repairing my car then spend $2000 on a new one. Either way, I get a car that works, but one way is a lot cheaper, less time-consuming and less stressful than the other. I also like Debbie’s ideas for alternate ways of getting around. In some situations having a car really is a necessity, but sometimes we just think it is because we’re used to it.

If you do not know much about cars, I would start by getting Cars for Dummies and some basic car repair books from the library. This will help you learn how to maintain your vehicles well and avoid getting ripped off by repair shops– not that I’m saying you haven’t been maintaining your car or that you’ve been getting ripped off, just that if you don’t already have this basic knowledge, acquiring it will save you a lot of money in the long run.

So my cars get down to being worth only $500 near the end, and repairs are still $200 - $700 or whatever, just like on newer cars. So I’m not a fan of comparing repair costs to current values, but I do compare them to replacement values.

I sold my first car the fourth time repairs cleaned out my bank account–then I went without a car for four years. I had decided that I just couldn’t afford one yet.

I sold my second car when it was 20 years old after someone crashed into it and the insurance money was enough to pay for another ten-year-old car. (So many repairs were required all at once that the decision was easy.)

My third car is still only 16 years old and runs fine, so I still have some time.

So I’m going to echo Alex with getting your car inspected (you can use a Lemon-Busters-type place or, if you trust you mechanic to not be too biased, just ask your mechanic what the prospects look like).

New cars and newer cars usually cost much more than maintaining your older car unless you have an unreliable and/or expensive model and would be replacing it with a reliable and/or inexpensive model. Even then, when you buy a used car you often have to fix up a few things that the previous owner let slide at the end because they knew they were about to get rid of it. So unless your current car stays trouble-free for a while, it looks like you’re going to be hurting a bit regardless of what you do.

So, you might also look into other forms of transportation: mass transit, carpooling, bicycling, etc. If that would be at all possible, it could give you some good breathing space in your finances. Does your employer have a car-pooling program or do you know of any co-workers who live near you? You could offer to pay for all the gas (they pay for insurance, repairs, etc.) or barter a weekly home-cooked meal for four or some other affordable yet valuable thing for such a service.

Good luck.

You say that your current auto is on its last legs. Is this something you know for sure? Perhaps it would be worthwhile to spend $100 or so to get a professional opinion on the true condition of your car. Then you can be in a better position to make a decision.

It does concern me when you say that $500 spent over two months drained your emergency fund. This indicates that your emergency fund is vastly under funded.

While considering the car issue perhaps you may want to consider your financial picture. If you have not already, begin using Quicken or MS Money to find out where your money is going. Then work to make some changes in spending and increase your savings. If you are a credit card user - stop. If you have debts, work on paying them off.

You need to have an emergency fund, a retirement fund, a savings fund(such as for auto replacement and repair expenses), and perhaps a vacation fund.

It sounds, from the brief info you provided, that your finances are a bit slim. I would look at the whole picture in addition to the car replacement analysis.

Take care and good luck.

The Maxima needed new brakes and a new exhaust. It probably would have been close to $1000 to repair. I also owed more on the loan than it was worth. I owed about 15k, which I could have sold it for privately, but not without fixing the issues.

While December is a great time to buy cars, another great time is the end of the fiscal year. Nissan’s recent big sale was to close out their fiscal year. I got my entire Maxima loan paid off by the dealership, and have a brand new Murano, so it’s under warranty, for about $50 more per month cause they wanted to sell it.

Essentially I see it as unloading a vehicle I would have taken a hit on no matter what, to now drive one that I don’t have to worry about. That $1000 repair alone covers the extra $50/month for the next 20 months.

Works for me.

as alex said, the standard formula is to never spend more on a car on repairs than it is worth. so, if you’re going to end up spending $5000 on your $1000 car, sell the car for scrap and put that $5500 or so down on a new car.

having said that, put that off as long as possible, keeping your eye out for good deals. if you know your car is going to die soon, prepare. save and watch for bargains. if you can put it off until december, that is when you’ll get the best deals, for example, a lot of places will reduce financing to 3% for any length, just to get cars off the lot (in any other situation, though, you should have financing before you step on the lot — car dealerships’ financing plans are designed to drain you).

i know, its mostly common sense, but consider it a friendly reminder. hope it helps.