Over the last two years, supply chains and Covid have kept more Americans in older cars. Folks who have never paid off a car are now driving vehicles they really “own” and – in a lot of cases – they’re planning on keeping them a bit longer. Inflation and interest rates are “driving” this change of heart. If your car is paid for (or almost paid for) and the repairs don’t cost much, it’s probably a good idea to keep it. Paying for cheap repairs on high-mileage cars can be a good idea, especially if the car is paid off. With expensive repairs, you may be better off upgrading.
Another consideration: The market for used cars is better than ever. CoPilot has found that used car prices are up 43 percent above projected normal levels. Cars that should retail for $23,000 are instead retailing for $33,000. Kelly Blue Book reports record-level prices for new cars as well, with vehicles costing about $48,000 on average.
If the used car you bought for $12,000 has less than 50,000 miles on it, you might be able to recover the whole cost in the current used car market. If you sell, you could put that money toward a new car. New car financing has been hit by scarcity and interest rates, though, so don’t be shocked if you’re still paying a premium – the average price of a new car has hit record highs, according to KBB.com.