Car Repair vs Replacement Cost Calculator

Deciding whether to keep repairing an older car or replace it is usually a question of total cost over time. This calculator compares two paths across the same ownership horizon:

• Keep your current car: you keep paying annual repairs.
• Replace the car: you pay for a replacement vehicle, it loses value (depreciation), and you pay its annual maintenance.

What you need to estimate (quick checklist)

• Annual repair cost (current car): Use the average of the last 12–24 months of repair invoices (exclude routine maintenance if you want repairs-only).
• Replacement purchase price: Out-the-door price is best (or at least the expected purchase price before taxes/fees—just be consistent).
• Annual depreciation rate: A simple percentage decline in value per year for the replacement car (e.g., 15%).
• Annual maintenance (replacement): Routine upkeep such as oil changes, tires, brakes, scheduled services.
• Ownership horizon: How many years you plan to keep either option before selling/switching again.

How the calculator works

The tool calculates the total ownership cost for each option over Y years and compares them:

• If Keep cost is lower, repairing is cheaper (financially) over the horizon.
• If Replace cost is lower, replacing is cheaper over the horizon.

Because replacement involves a car that still has value at the end of the period, the calculator treats replacement “cost” as:

• Depreciation (value lost over the horizon) + maintenance over the horizon.

Formulas used

1) Keep (current car) cost

The keep scenario is modeled as a simple annual repair spend:

C_keep = R × Y

Where:

• R = annual repair cost for the current car
• Y = ownership horizon in years

2) Replacement depreciation

This calculator uses compound depreciation: the car’s value declines by the same percentage each year. If the purchase price is P and annual depreciation rate is d (as a decimal), then the estimated value after Y years is:

Total depreciation over the horizon is the value lost:

C_depr = P − V

3) Replacement total cost

Maintenance is modeled as a simple annual amount M:

C_replace = C_depr + (M × Y)

Where:

• P = replacement purchase price
• d = annual depreciation rate (percent ÷ 100)
• M = annual maintenance cost for the replacement car
• Y = years

Interpreting your results

• Large difference (thousands of dollars): the cheaper option is relatively robust. Still, sanity-check your depreciation rate and repair estimate.
• Small difference: the decision is sensitive to assumptions. Try running scenarios (best / expected / worst) by adjusting annual repairs and depreciation.
• Time horizon matters: replacement often looks “worse” over short horizons because depreciation is front-loaded; longer horizons can narrow the gap.

Worked example

Assume:

• Annual repairs (current car), R = $1,200
• Replacement price, P = $15,000
• Depreciation rate, d = 15% = 0.15
• Replacement maintenance, M = $400
• Horizon, Y = 5

Keep cost:

C_keep = 1,200 × 5 = $6,000

Replacement value after 5 years:

V = 15,000 × (1 − 0.15)⁵ ≈ 15,000 × 0.4437 ≈ $6,656

Depreciation:

C_depr = 15,000 − 6,656 ≈ $8,344

Maintenance over 5 years:

M × Y = 400 × 5 = $2,000

Total replace cost:

C_replace ≈ 8,344 + 2,000 = $10,344

Conclusion: Over 5 years, keeping the current car is cheaper by about $4,344 under these assumptions.

Scenario comparison table

The table below shows how the decision can change as repair costs and depreciation change (example assumptions: P = $15,000, M = $400, Y = 5).

Limitations and assumptions (important)

• No financing costs: Loan interest, opportunity cost of cash, and down payment effects are not included.
• No taxes/fees: Sales tax, registration, dealer fees, and inspection costs are excluded unless you bake them into the purchase price.
• Insurance not modeled: Insurance can differ significantly between cars and can change the outcome.
• Fuel economy not modeled: If a replacement car saves fuel (or costs more), include that separately or adjust annual costs accordingly.
• Repairs are simplified: The “keep” option assumes a constant annual repair cost; real repair spending is lumpy (one big transmission year, then quiet years).
• Depreciation is an estimate: Actual resale value depends on mileage, condition, market swings, and model desirability. The calculator uses a steady compound rate for simplicity.
• Maintenance categories can overlap: Be consistent in what you call “repairs” vs “maintenance” so you don’t double-count.
• Non-financial factors matter: reliability risk, downtime, safety tech, comfort, and personal preference can justify a higher-cost choice.

If your result is close, run a few “what if” cases (e.g., higher repairs next year, different depreciation rate, longer/shorter horizon) to see how stable the recommendation is.