With over 50 years in the auto repair industry as a Master ASE and General Motors technician, vocational educator, I’m an expert when it comes to getting the most out of a car. I keep most of my cars for at least 15 to 20 years or more. All fluids are regularly flushed, all my filters, hoses, and belts are changed before they have a chance to go bad. I get a new battery every three years, and any issues that do arise are fixed as soon as I can obtain replacement parts. Although my cars were well aged, they looked and ran as well as the day they were new.

But even I’ve had to face reality when it comes to the cost of keeping my cars on the road. Parts become difficult to find, and rust never sleeps, no matter how hard you try to minimize corrosion (especially in the salt belt where I live). Twenty-year-old cars have nominal financial value, leaving me little incentive to sell them. It was easier to donate them to my former technical school to help train the next generation of automotive technicians.

So, how do you decide when to continue investing in a car and when it’s no longer worth it? Read along as experts in the financial, automotive and insurance industries explain how long to keep your ride before repair costs outweigh returns.

Defining Car Value

How Long You Should Keep Your Car Gettyimages 2180929218
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All cars have value—either monetary, emotional, reliability, design, or as an artifact—but in terms of dollars and cents, it’s only worth what the “traffic-will-bear” (what someone is willing to pay for a particular car on a particular day.

Kelley Blue Book is the best source available for consumers to determine the cash value of their car. To obtain the most accurate value, be sure to list all options and provide accurate information regarding the mileage, accident history, and condition of the glass, body, paint and seats. Zander Cook of Leaseend explains it this way, “Cars have a financial value—including operating costs, utility value—and how well the car still meets your needs, and [although not an emotional value] peace of mind that their vehicle won’t experience a catastrophic failure not covered under any warranty.”

Factors influencing financial value

“Car values can mean different things to different people,” said new, used and leasing car specialist Ben Shoolin, including:

  • Market Value can be driven by supply and demand, location, seasonality (e.g., summer for convertibles; winter for 4-wheel drive), and economic trends.
  • Trade-In Value is what a dealer offers when “trading in” your car for another. Trade-in value is lower than market value.
  • Retail Value is the list price of a car.
  • Book Values are the published estimates from sources such as Kelley Blue Book or NADA Guides, but do not always consider local market differences.
  • Replacement Value is determined by your insurance company if replacing your car with a similar vehicle if it’s totaled.
  • Residual Value is the anticipated worth of a car at the end of the lease.

Emotional vs. financial value

How much a car is worth to you is an abstract idea of value. “A car that may have hardly any cash value may be a reliable workhorse for you,” said finance expert at AutoInsurance.org Melanie Musson. Emotional value only matters to the owner.

“Financial value only counts when you are buying or selling a vehicle,” said Michael A Klitzke, Esq., CEO at Auto Law Firm. Klitzke added, “Whether someone else thinks your car is ugly, if you like your vehicle, it isn’t having any major problems, and it fits your needs, it doesn’t matter how old it is if you like [your car] keep it.”

Shoolin added, “I am the perfect example of an emotional car owner.” He explained he recently sold his prized 1974 Pontiac Grand AM. It was his first new car, and after 50 years, it still held high emotional value. Although his passion for this classic car outweighed the resale price, he knew it was time and selling it was the sensible thing to do.

Typical Vehicle Lifespan

It depends. According to Junk Car Medics, most cars in the U.S. last about 16 to 17 years or 150,000 to 160,000 miles. “With good maintenance, the manufacturer/brand, driving style and habits, plus the climate where you live, many models can exceed 200,000 miles,” said Klitzke. Of course, if you do all stop and go city driving, drive in dirty dusty conditions, live in harsh climates, and don’t perform basic maintenance, your car will probably have a significantly shorter lifespan.

Understanding Depreciation

Based on age, mileage, market demand and other economic factors, depreciation is a car’s gradual loss of value. Cook explained, “Internal combustion engine vehicles lose about 20 to 25 percent of their value in the first year, then another 50 to 60 percent over the next four years.” Thankfully, depreciation slows significantly after five years. However, added Shoolin, “Mileage, condition, and brand reputation still influence a car’s overall value.” Cook did add, “Luxury and electric vehicles sometimes see even sharper early depreciation.”

Cost of Car Ownership Over Time

According to the latest AAA Annual Report on Vehicle Costs finds “owning and operating a new car [driven 15,000 miles annually] costs $11,577 a year.” All my experts agree the first five years are the most expensive when depreciation is greatest. However, in more day-to-day terms, as depreciation stabilizes, maintenance and repair costs increase.

On the flipside, insurance costs and financing fees decrease. Depending on where you live, taxes, registration and licensing fees, as well as fuel costs, usually fluctuate. All these factors contribute to the overall cost of car ownership. Edmunds’ excellent online Cost of Car Ownership tool calculates unforeseen costs you’ll want to consider before purchasing your next vehicle.

Insurance Costs As Vehicles Age

Due to higher replacement costs and collision coverage, newer cars have higher monthly insurance premiums. However, according to Musson, as cars age, “because depreciation and replacement value decreas (meaning it will cost the insurance company less for a total loss settlement), they have lower insurance premiums.” Klitzke added, “Insurance companies like to use LKQ (“Like, Kind, Quality” or junkyard parts) and cheaper ‘knock off’ parts instead of the more expensive original equipment manufacturer (OEM) parts. Brand-new vehicles will not have those cheaper parts available.” Installing LKQ parts also lowers the value of your car due to diminished value.

Breakeven Analysis

In simple terms, breakeven analysis is a calculation that helps determine whether you’re spending more on repairs than you would on a year’s worth of payments for a newer car. For example, if an aging vehicle is costing you $3,000 to $4,000 a year in repairs, could you purchase a replacement car for that same monthly cost? If yes, you’ve hit breakeven. Risk also matters. “If the vehicle is entering the mileage or age range where major failures become more likely, you should factor that risk into your breakeven math, even if the car hasn’t had a big issue yet,” said Cook. Breakeven may depend on how much you drive.

“High-mileage drivers reach breakeven faster than low-mileage drivers,” said Shoolin. “Positive equity (your car is worth more than what is owed) extends the breakeven point.” Budgeting for unexpected repairs can be the best way to stay ahead of the breakeven curve, as well as avoid surprising, substantial expenses.

Mechanical and Reliability Considerations

Without factoring in mechanical reliability, any breakeven analysis will be flawed. Even if breakeven looks good on paper, mechanical reliability determines if a car can actually deliver on those savings. A car having frequent mechanical breakdowns isn’t just unreliable; it can quickly become a financial burden. Performing a cost-per-mile analysis can help gauge a car’s value. “Holding onto your older car can be a risk-versus-reward trade-off,” said Musson. “Cars that are regularly serviced and maintained have longer lifespans, run reliably for higher than average miles and tend to hold their value better and also give owners more peace of mind and less frustration.”

FAQ

Is “10 Years or 150,000 miles” a good rule?

It depends. When I first started fixing cars in the 1960s, cars that hit 100,000 miles were rare. As mechanical reliability increased over the next several decades, the 10-year or 150,000-mile rule became semantics—it was assumed a car’s major (expensive to repair) systems, such as the engine, transmission, suspension, air conditioning and electronics, would begin to fail. Modern cars are more complex and complicated to repair, but according to Consumer Reports, “should be capable of 200,000 miles or more…[and] generally are better built because many features are implemented efficiently, such as abilities added via software rather than new mechanical components.”

What is the 50% rule when it comes to vehicle value?

“It doesn’t make sense to repair a vehicle if the cost is more than 50 percent of the current value. But if you can’t afford to purchase a new vehicle (or can only afford to purchase a prior accident vehicle), then it might be a terrible idea to give up on the current vehicle that needs repairs,” explained Klitzke. Even after the repair, the car’s market value will still not increase.

Experts

  • Ben Shoolin has been a professional new vehicle General Motors salesperson for over 45 years and is an award-winning Buick/GMC Mark of Excellence Sales and Leasing Specialist at O’Neil GMC in Warminster PA., a multiyear award-winning, General Motors Customer Satisfaction dealership.
  • Melanie Musson is an auto industry, insurance and finance expert with AutoInsurance.org and is the fourth generation in her family to work in the insurance industry.
  • Michael A. Klitzke is the CEO at Auto Law Firm, PC. Michael handles auto fraud and lemon law cases against car dealers throughout California in state and federal courts.
  • Zander Cook is the Chief Risk Revenue Officer (CRO) at Lease End, a platform that provides drivers with the technology and advisory services to pay off their lease and purchase their vehicle when their lease ends.

Sources

Author
Bob Lacivita
Since rebuilding his first engine at age 14, cars have been Bob Lacivita's passion, as well as his way of life. He went on to become an award-winning ASE and General Motors auto technician, vocational educator, career and technical center administrator, technical consultant and freelance writer; teaching legions of students and readers about DIY ca...
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