Should You Buy a New Car, or Keep the Beater?

Used car prices remain high, and new car prices are out of control. The market appears bleak for car shoppers. So, should you buy the new car or keep the beater?

My approach to car buying and maintenance is a bit unique. I was raised in a household where we fixed our vehicles when something broke. Thus, when I am willing and able, I make certain repairs to my 21-year-old Tahoe. However, I don’t always have the time to fix it. Even if I did, it may not be worth it for me to do it.

I wouldn’t expect the untrained or unmotivated individual to fix anything on their ride, and so, I approach the following with that consideration in mind.

When to Move On

If your vehicle is consistently in the shop, costing you a considerable sum – and impacting your ability to make it to work – then it may be time to upgrade. A good rule of thumb might be to begin a search for a different car when your current one requires more than one major repair each year (fuel pump, water pump etc.). Advanced mileage (100,000, 200,000+ miles) can be a strong leading indicator for how often you can expect repairs, and there is an abundance of data available for each make and model that identifies the common issues you might encounter for your specific vehicle.

If your transmission goes out, or something in the engine fails that requires an extensive overhaul or replacement, it may be time to upgrade right away. When the cost of a repair comes close to meeting or even exceeding the car’s market value (assuming that the issue gets fixed and the vehicle is in good, operable condition), you should seriously weigh the option of letting the broken vehicle go (recovering little value, since it is broken) or fixing the car and continuing to drive it. The third option would be to fix it, sell it, and then upgrade, but you would want to ensure that you could recover the maintenance expense.

New vs. Used

When it is time to start your search, there are inevitably two routes: buying a new vehicle off the lot or purchasing a used one. Buying used can mean anything from a two-year-old vehicle with low miles, to a vehicle in the last third of its life (like mine).

According to CarEdge, the average price of a new car in January of 2025 was $49,740, (near an all-time high) and the average monthly payment was $756. Following a recent decline in used car prices, the average used vehicle price increased to $25,128 (May, 2025).

In essence, cars are expensive. Absent a crystal ball, you should assume that will continue. The reliability of vehicles is not equally distributed, so be sure to research the new or used car you are considering and incorporate the vehicle’s reputation into your decision.

Purchasing a slightly used, two- to five-year-old vehicle with the goal of driving it for many years may be the ideal option for most people. For those comfortable driving something a little older, the primary focus should be reliability and vehicle reputation.

If you are driving something newer that is under a factory warranty, and you find that you always want something new every few years, try resisting that urge. Rolling negative equity from car to car is not a sound financial strategy. Only when you can improve your situation – like trading a higher cost vehicle for a lower cost one – will this make sense.

Final Thoughts

Ultimately, most vehicles (collector cars being the notable exception) are a declining asset, and should be treated as such.

As with every major purchase, if your finances comfortably allow for it (your ability to save and invest won’t be greatly impacted), by all means, buy your ideal car!