CFI Blog

Repair or Buy? What Did We Do?

“Middle Age – When you want to see how long your car will last instead of how fast it will go.”


As I discussed in the last article, my wife and I were faced with a decision on what to do with her car, a 2001 Toyota Prius with 113,000 miles on it that just had the battery die. Since the repair bill was $2,900, we decided to look at other cars which were available on the market before committing to plunking down the money for the repair. Our choices were:

  • 1999 Honda Accord, 134,000 miles, $6,900
  • 2001 Toyota Camry, 38,500 miles, $9,500
  • (for comparison) 2012 Honda Civic (new), $16,500

What did we decide?

Drum roll, please…

We wound up buying the 2001 Toyota Camry. Now, let’s examine the reasoning behind our decision.

  • The Camry had the lowest miles, and, as it was priced, we could buy it for what the Kelly Blue Book listed as a trade-in value.
  • We were able to negotiate another $500 off the list price. The dealership where we bought it, Crown Auto Sales in Orange, Virginia, was FANTASTIC to work with – no pressure, very low key. If you’re within a hundred mile radius and want to buy a used car, then that’s the place to go!
  • Even if we would have fixed the battery on the Prius, it was still a 113,000 mile car. Since 2001 was the first model year of the Prius, we couldn’t be terribly sure of its life expectancy. We’d done some research and did find a couple of instances of 200,000 miles on Priuses, but the stories were not legend. We thought that the expected lifespan and cost of future maintenance on the Camry would be worth the difference in price.
  • Paying for the repairs would only make our Prius worth, at most, $6,000. While we want to drive our cars until they die, we used trade-in value as a proxy for remaining life.
  • Hybrids are complicated to maintain. Our usual mechanic was comfortable doing the basics that were comparable for all cars, such as oil changes, struts, tires, etc.; however, once it came to the computer, battery, or converter, the shop refused to touch it and referred us to the dealer for maintenance, which is almost invariably a more expensive alternative.
  • The lion’s share of depreciation was done on the Camry, as opposed to buying a new car, where depreciation happens the moment you drive it off the lot.
  • We decided that $6,100 – the difference between paying for the battery on the Prius and buying the Camry – was a reasonable trade to get a car with 74,500 fewer miles.
  • There was still trade-in value for the Prius, lowering our effective price on the Camry.

Making a decision on whether to pay for a large repair on an older car is always difficult, particularly when there is an unknown expected future lifespan for the car. At the bottom of our decision was probably a fear of loss. My wife even expressed as much, although probably not realizing that it was Prospect Theory, when she stated that her biggest fear was that we’d pay for the battery only to have to make another major repair in a few months. We’re plagued by the “what if the car dies right after I pay for this major repair?!?” question any time we face having to do more than change the oil, and in this case, Prospect Theory won out over us, and the fear of loss – the sunk cost of replacing the battery only to not realize the return on our investment because of a new repair or an irretrievable loss – weighed heavily in our decision, leading us to buy a different car.

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John Davis
John Davis is a nationally recognized expert on credit reporting, credit scoring, and identity theft. He has written four books about his expertise in the field and has been featured extensively in numerous media outlets such as The Wall Street Journal, The Washington Post, CNN, CBS News, CNBC, Fox Business, and many more. With over 20 years of experience helping consumers understand their credit and identity protection rights, John is passionate about empowering people to take control of their finances. He works with financial institutions to develop consumer-friendly policies that promote financial literacy and responsible borrowing habits.

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