There’s a battle intensifying in our home.

I want to keep my 13-year-old Honda Odyssey. I’ll admit it’s definitely a clunker. For a bit of time the windshield wiper on the rear window wasn’t working, and I had to duct tape it to the window to keep it from swinging down. But I eventually got it fixed for about $30.

I tried the duct tape trick on the broken cup holder in one of the middle seats, but the tape didn’t hold. And there are so many small dings on the van that if someone accidentally hits me, I wouldn’t be able to tell if it’s a new dent.

In the past year or so, I’ve had to fix the air conditioner and repair other parts. Now there’s a grinding noise when I turn the wheel. Could be something with the power steering, my trusted mechanic told me when I called recently to describe the sound. I’ll be dropping the van off soon to get that issue repaired.

AD
AD

Over the past two years, I’ve spent about $3,000 on repairs. But I’m okay with that. I think the van has got some more spunk and miles to go. My husband wants to replace it. I want to keep repairing it. This is the debate every time we drive the van.

So, when is the right time to break up with your old car?

This was the question brought up by a reader recently during my weekly online discussion: “Is there a sweet spot that tells you when it’s time to stop putting money into an old car and when to purchase a new or used one?"

Here’s the backstory on this reader’s clunker: “My last car payment was 16 months ago. Since then I’ve only had to put in $500 in repairs (about a one-month car payment). Now the vehicle is having new issues, and repairs will cost approximately $2,500. That would be six months of payments in repairs. I’m wondering if there is a point where the math finally says it’s time to stop pumping money into the old car — like once I’ve invested X dollars over X time this means I would be better off getting a new or used car.”

AD
AD

There is no consensus on when is the right time to cut your losses because the answer depends on so many things.

“There isn’t really a ‘sweet spot’ to determine when to stop fixing your old car, because in most cases, it will usually be less expensive to repair it and keep driving it,” says Ronald Montoya, senior consumer advice editor for Edmunds.com, one of my go-to websites for car reviews and pricing information.

Montoya says that before you give up on your older car, consider the total cost if you decide to buy another vehicle.

In this reader’s case, $2,500 in repairs is expensive. But signing up for another six years of car payments will cost even more. And, that is the average length of an auto loan these days. An increasing percentage of car buyers are opting to stretch their monthly car payments far longer than the traditional four-year auto loan.

AD
AD

If you’re buying a new car and taking out a loan you’ll incur interest charges, taxes and perhaps a higher insurance rate. If you’re borrowing for a used car the same costs apply.

The annual percentage rate on new financed vehicles averaged 5.8 percent as of late summer, according to data from Edmunds.

If you can nab a zero-percent-interest deal that will lower your cost of new ownership. But take heed, Edmunds’s latest data shows just 6.1 percent of finance deals were zero percent.

The average loan was $32,590, financed over about six years with a monthly payment of $556 after a down payment of $3,991, according to Edmunds. The average used car loan was $22,252 after a down payment of $2,655 with an annual percentage rate of 8.5 percent. The monthly payment was $412

AD
AD

You might opt to purchase a low-priced used car outright, but you still may face costly repairs. There is something to be said about the devil you know.

Lots of folks will make the decision to get rid of an older car just by looking at the market value of their current vehicle. For example, if the car is worth about $1,500 and a repair will cost $2,000, they’re off to the dealership.

Again, as Montoya points out, replacing that car is likely to cost you significantly more than repairs on an annual basis. Besides, if you’re keeping the car, its market value doesn’t matter. The goal is to have a functioning car, which you can have if you repair it.

AD

There are of course other reasons besides constant repairs that may have you wanting to trade up to a new or newer/used car. Maybe you want or need newer safety features.

AD

But if you’re not in the financial position to upgrade just yet, you need a sweet-spot rule, right?

Here’s my rule for when it’s time to let go of a car. I call it my “three-strike rule.”

The vehicle has to strand me three times in a situation that I feel unsafe or highly inconvenient — breaking down on the highway, on the way to work or to an important appointment.

Strand me three times without any warning of an issue, and I’m kicking the car to the curb. That’s my sweet spot. I can’t handle the stress of repeatedly being stranded or wondering if the car will start as I’m heading somewhere.

AD

The key to this rule is being able to plan repairs. When I detect a problem, I call my mechanic and get the repair taken care of as soon as possible. This of course means having a car repair cash cushion, which I do and so should you. And here’s how.

AD

Once you finish paying off your auto loan, don’t incorporate that money back into your budget. Take that monthly payment and stash it into a savings account. You can then use that money for repairs or eventually to pay cash for your next car — in 10 or 15 years.

If you’re keeping an older car be sure to have a mechanic check it out regularly, which you can do when getting an oil change. You’ll save more money by catching mechanical problems early. Don’t ignore warning lights.

AD

So far, my van has stranded me only once, although it was a most inopportune time. It was last year, and I was moving my youngest child into her freshman dorm about 50 miles from our home. Thank goodness, my nephew had driven along to help unload her things. I had a ride home. I just had the van towed to my mechanic.

But, that’s strike one. Two to go.

AD

“If the repairs start to become more frequent and the costs are hard to keep up with, or if the car leaves you stranded often, making you late to work or putting you in a potentially dangerous situation, you might want to consider another vehicle,” Montoya said.

Color of Money Question of the Week

What’s your rule for when it’s time to replace your old car? Send your comments to colorofmoney@washpost.com. Please include your name, city and state. Put “Repair or Replace” in the subject line.

AD

Live Chat Today

Join me today at noon (Eastern time) for a live discussion about your money. To participate in this week’s discussion live or read the transcript after it’s over click this link.

I’m live every Thursday from noon to 1 p.m. (Eastern time).

The pros and cons of multilevel marketing

A recent settlement between the Federal Trade Commission and a multilevel marketing company is another reminder to be careful about getting involved in a side hustle that depends on you recruiting others to the scheme.

AD

In a multilevel marketing pyramid scheme, would-be entrepreneurs pay to become a sales representative or member of the company, with the right to sell the same privilege to others. The sale of a product is typically involved but is merely secondary to the recruitment of new participants.

Read:

Last week, I asked: What’s been your experience with a multilevel marketing business?

Kelli Denard of Chicago wrote, “I was part of a MLM. It wasn’t expensive to get in, but they pressured you to attend ‘conventions,’ which were nothing more than the top earners parading onstage. They pushed variable life insurance as a way to invest, using high-fee investment products. Most appalling to me was the push for people to persuade their friends and family to convert their existing mortgages to an adjustable-rate mortgage (ARM) or for new home buyers to get an ARM instead of a fixed rate to use the ‘extra’ money for investing. I went to the training, listened to the sales pitch and concluded that there was no way I would even consider pitching that bad idea to anyone. That was in the 2000s and then the housing crisis came so my instincts were right.”

“I am involved in an MLM company,” wrote Ken Sparks of Jasper, Ind. “It has been some work, but it also has been a way to make some extra cash. Our products are fantastic, they do actually sell themselves.”

Joanna Allison from Newberg, Ore., was involved in network marketing. It didn’t go well for her. “I had signed up at one point only to find out there is a $40 a month fee just to keep my ‘business website’ up and running which I did not know about. MLMs have left a sour taste in my mouth and all seem like pyramid schemes because the more people you recruit, the more you make! At least this is what they say. They also want you to buy and sell their product as well as recruit, recruit, recruit.”

Sharon from Poughkeepsie, N.Y., wrote, “I’ve been part of network marketing for about three years and quite honestly I wonder what kept me from doing it for so long. The people on my team are some of the most genuine and supportive that I’ve ever met. To be honest, I’m not even any good at it but my business is still profitable. Some companies are probably unscrupulous but for the company I’m with I’ve NEVER felt pressured to spend money when I don’t want to. My company doesn’t promise fortune and fame either.”

Color of Money Columns This Week

Knowledge isn’t power.

The right knowledge is power. Stay informed about your money.

In addition to this newsletter, please read and share my weekly personal finance columns. Here are some recent columns:

Newsletter Comments Policy

Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or initials. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict with family or friends.)

Have a question about your finances? Michelle Singletary has a weekly live chat every Thursday at noon where she discusses financial dilemmas with readers.

You can also write to Michelle directly by sending an email to michelle.singletary@washpost.com. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested.

To read more Color of Money columns, go here.

If you’re viewing this post online sign up to automatically receive Michelle Singletary’s newsletters right into your email box: “Your Retirement” on Mondays and “Personal Finance” on Thursdays

Follow Michelle Singletary on Twitter @SingletaryM and Facebook.