The brake light has come on, and the check engine light occasionally flickers. The AC went out in Florida’s heat, and a shot of freon didn’t fix it. Should a 2012 Mini Cooper be repaired? Or is it time to go car shopping?

Here’s how to make the call.

Car Prices and Maintenance and Repair Costs

Car prices, both new and used, have skyrocketed in the last few years. Car payments have also gone up. That’s partially because of higher interest rates, and partially because the average car price has risen.

New car prices average $48,000. Auto manufacturers have focused more on building SUVs and higher value cars over the past decade, so there are fewer starter cars, or new cars costing under $23,000, though they are still being made.

Consumer Report writes that “the average price of a used car hovers around $27,000, with the average interest rate on a used car loan at 11.7 percent.”

The bright spot in this is that electric vehicle prices are dropping, with some new models costing almost 22% less this year. Meanwhile, used electric vehicle sales are soaring, with an average price of $27,800.

Just to rub salt in the financial wound, vehicle insurance prices have also increased by 22% since January of 2022.

Inflation has also affected services. In July, Scripps News reported that the cost of vehicle maintenance and servicing has increased nearly 9% year over year while repair prices jumped 19.5% — six times the rate of inflation.

Despite the higher prices, higher interest rates, and higher insurance rates, new car sales haven’t lost momentum this year. At the same time, the average age of light trucks and cars on the U.S. roads rose to 12.5 years old. The older vehicles keep repair shops busy, and raise the demand, and prices, for older parts.

How to Decide Whether to Repair or Replace Your Car

Figuring out if it is time to head to the repair shop or auto dealer depends on several things. We will look at each one a little more in depth.

What to Consider When You’re Considering Whether to Repair or Replace Your Car

Here’s what to consider when deciding whether to repair or replace your car:

• Money still owed on the vehicle vs. a free and clear title
• Vehicle value vs. estimated costs of repair
• Major repairs already done vs. looming repairs
• Your current financial status
• How much life the vehicle has left

Assess Your Car’s Value

Figuring out the range of your car’s value isn’t tricky. This is an important first step — do you still owe money on it? How much is your loan and is it worth refinancing? There are several online calculators, like Kelley Blue Book, Carfax, and Car & Driver.

Let’s take a look at my car, for example. Online calculators valued my car between $2,298 and $8,332. Local similar cars for sale were priced $6,999 to $17,000. The car is paid off, which is true for about 55% of Americans, who own their cars without debt.

Assess Repair Estimates 

Next, it’s time to look at repair costs — what’s needed now and what will be needed down the road.

Fixing the brakes on my Mini would cost around $1,200, and replacing the evaporator core to fix the air conditioning would be about $1,800. The mechanics suggested replacing the back brakes, but there were no immediate issues. The total was $3,000 in car repair.

So, repair or replace? It isn’t really clear cut, even with the range of value for the car versus the estimated costs of repairs.

Do the Math on a Loan

Paying off a new or leased car takes an average of 42 weeks salary, up from pre-pandemic average of 33 weeks. The average new car payment is $725, or $586 for a leased car, and the terms last for a little less than six years. Financial experts state that a monthly car loan payment shouldn’t exceed 10% of your monthly income.

Assess Your Vehicle’s Health 

Your mechanic can look at the overall health of your car by doing a complete vehicle inspection. This might be a good investment to help decide whether you should repair or replace. If besides the front brakes and evaporator core, the Mini Cooper is in good shape, that tips the balance toward repair. If a mechanic found a list of things that look questionable, then it would be time to look at your tolerance for a car payment.

It’s also good to look at how long a car will likely last — and how much it gets driven. Cars generally last for 200,000 miles or more, and Mini Coopers last at least that long, and maybe a little longer.

If You Do Sell…

If you decide that it is time to replace your car, you can either sell or trade it in. Selling your car yourself gets you more money, which matters if you still owe a lot on it. If you decide to sell it privately, you will need to spruce the car up and fix some of the issues. Be honest because there are penalties for misleading a buyer.

Repair or Replace: How I Made the Call

Deciding whether you want to repair or replace your car can be distilled to your comfort with taking on or extending car payments, how much life is left in your car if repaired and what your tolerance is for the uncertainties of an aging vehicle.

Ultimately, I decided to fix the Mini Cooper’s brakes since it was a safety issue. I’ll probably get the air conditioning fixed, but I’ll need to get a couple more estimates.

A factor going into my decision was how much it gets driven. Currently the Mini gets driven about 7,000 miles a year, slightly more than half the average American car. Older cars also have cheaper insurance costs, which saves a few hundred dollars.

Taking on a car payment would significantly impact my budget, whereas repairing the car could be absorbed more easily. While credit card interest can be higher than loan interest, some automobile repair chains offer their own credit cards with promotional deals.

My Mini has 50,000 to 100,000 miles still to go, or at least seven more years of tooling around in it with my current average driving. Hopefully it won’t need any more major repairs for a year or two. Fingers crossed!

The Penny Hoarder contributor JoEllen Schilke writes on lifestyle and culture topics. She is the former owner of a coffee shop in St.Petersburg, Florida, and has hosted an arts show on WMNF community radio for nearly 30 years.