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Justifying Repair Expenditures Exceeding Market Value

21 messages,  Last post on Feb 23, 2010 at 8:03 PM

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#1 of 21 Justifying Repair Expenditures Exceeding Market Value by hpmctorque

Jan 26, 2010 (6:36 pm)

There are times when people spend more on repairs than the market value of their old car. I can understand if someone has a car they absolutely love, but can this ever be a reasonable decision, from an economic standpoint?
 
This discussion is about someone who knowingly decides to repair rather than to sell, trade, donate or scrap their car. It's not about investing in a new transmission, and then, two months later, learning that the radiator and water pump are shot too, and replacing these as well. In other words, this isn't about being nickel and dimed, but, rather, on consciously deciding to spend something more than the retail value of the car, for repairs.
 
Shifty, maybe this discussion should also be included in the Maintenance and Repair board, if you think that's appropriate.

#2 of 21 Re: Justifying Repair Expenditures Exceeding Market Value [hpmctorque] by Mr_Shiftright HOST

Jan 26, 2010 (8:04 pm)

Replying to: hpmctorque (Jan 26, 2010 6:36 pm)
Yeah, good suggestion!

#3 of 21 Re: Justifying Repair Expenditures Exceeding Market Value [hpmctorque] by isellhondas

Jan 28, 2010 (7:28 pm)

Replying to: hpmctorque (Jan 26, 2010 6:36 pm)
Are we talking about modern cars or collector cars?
 
On collector cars people often far exceed the value of the car when a restoration get's out of hand. They know this going in but they still do it.
 
I know a guy who is having a 1953 Mercury professionally restored. He send the shop between 1000.00 and 6000.00 every month and this will be a three year ordeal. It'll be a Trailer Queen. He was telling me how much just the chrome work will cost and it's staggering. It sounds like he will have north of 150,000 in it when it's done.
 
Now, on a modern car, the cost of a transmission job or even a big repair job can easilly exceed the car's value. People do this too.

#4 of 21 Re: Justifying Repair Expenditures Exceeding Market Value [isellhondas] by andre1969

Jan 29, 2010 (6:16 am)

Replying to: isellhondas (Jan 28, 2010 7:28 pm)
Now, on a modern car, the cost of a transmission job or even a big repair job can easilly exceed the car's value. People do this too.
 
I can see the justification in that, under certain circumstances. For example, when I had my 2000 Intrepid, I would have been willing to replace the transmission if it went out. I think a tranny in that car is about $2500-3000. When the car got totaled, I got $2,000 for it. My reasoning is that the car was running well otherwise, and if I had the work done, I'd know I at least had a $2,000 car with a good transmission, that would probably be reliable for awhile. On the flip side, I could ditch the car, find another $2,000 car, and have its transmission go out in a couple months, and be right back where I started.
 
Of course, there's always the chance that I could put $2500-3000 into the car, and then have it get totaled a month later. But that's the chance you take when you're driving an older car.

#5 of 21 Re: Justifying Repair Expenditures Exceeding Market Value [isellhondas] by hpmctorque

Jan 29, 2010 (7:31 am)

Replying to: isellhondas (Jan 28, 2010 7:28 pm)
We can talk about modern and collector cars because the reasons for spending more than a car's retail value on repairs provide interesting contrasts regarding the economic and emotional rationales for making these decisions.
 
As your example of the owner of the '53 Mercury illustrates, there's a distinction between rational and rationale. This gentleman's decision is probably not rational, from an economic or investment standpoint. However, his rationale for this restoration is probably something along the lines of, hey, I want to restore this car, and I can afford to do it. Nothing wrong with that. It's his car, his money, and it's a free country. I wouldn't choose to put that kind of money into a '53 Mercury, or any Mercury, for that matter, but I respect this man's decision.
 
By contrast, andre's line of reasoning represents the economic thinking of those who choose to invest in more modern cars.
 
In case you're interested, I posted my situation with my '87 BMW 325 on the Maintenance and Repair board, and got some really good, albeit contrasting, suggestions.

#6 of 21 Re: Justifying Repair Expenditures Exceeding Market Value [hpmctorque] by isellhondas

Jan 29, 2010 (7:58 am)

Replying to: hpmctorque (Jan 29, 2010 7:31 am)
When it comes to old cars, I think a person is FAR better off buying one that is already "done".
 
The over restored Trailer Queens that go through Barrett-Jackson don't do a thing for me. As overpriced as (I think) they are, it's pretty doubtful that a person could buy a rough car and have it brought into that condition for what they sell for.
 
I respect my friend's decision to restore that '53 Mercury. He has no wife or children;and (I guess) money to spend freely.
 
I wouldn't do this but it's his choice. Good for him!
 
In the case of Andre's Intrepid. OK, a 2000.00 car needing a 2500.00 transmission? With a bad transmission on a high mileage 10 year old car, that Intrepid is basically totalled. BUT, if Andre feels confident about the car otherwise. I agree with him. Fix the car and drive it if it seems OK otherwise.
 
It's a tough decision because the question is, what's next? An old car can quickly become a money pit but not always.

#7 of 21 Re: Justifying Repair Expenditures Exceeding Market Value [isellhondas] by hpmctorque

Jan 29, 2010 (8:25 am)

Replying to: isellhondas (Jan 29, 2010 7:58 am)
I agree with each of your points.

#8 of 21 When considering repair or not by euphonium

Jan 29, 2010 (12:09 pm)

The car needs to be repaired to be a viable trade in so after it is fixed, you might just as well continue to drive it. After all, the next owner will run it.
 
 Because people I know will buy my used cars, I always keep them maintained.

#9 of 21 Re: When considering repair or not [euphonium] by 0patience

Feb 06, 2010 (12:04 pm)

Replying to: euphonium (Jan 29, 2010 12:09 pm)
It isn't uncommon for people to pay off their vehicle, then still keep taking the payments out of their budgets to cover repair costs.
One couple I know have a seperate bank account where they still put the car payments they no longer make in that account. When the vehicle brakes, the use that money.
Some people will make bank to their repair shop who track their monies.
You'd have to really trust your repair shop to do that. (small towns et all)
Some will pay for extened warranties. Sometimes they pay off, sometimes they don't.
 
In some shops, the other option is to make payments to a repair shop.
A lot of folks do that to me.

#10 of 21 Re: When considering repair or not [0patience] by Mr_Shiftright HOST

Feb 06, 2010 (3:21 pm)

Replying to: 0patience (Feb 06, 2010 12:04 pm)
If you owned a Porsche and recently got married, you could open up a bridal registry at the local repair shop.

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