Repair vs Replace a car

Question

I bought a used Honda Accord in 2010 for $17k+ tax and fees. It has 59,102 miles and is paid off. Kelly Blue Book says that it's worth $6-7k. A new car such as a 2015 Accord will cost about $16k + fees @3.09% or about $17k. My credit is excellent and getting the lowest interest rate will be no problem.

My car started to burn oil in January. I had the oil changed and the oil light came on briefly for 10-15 seconds when going uphill and then went out. The dealer said I should bring it back at 1k, 2k, and 3k miles to review oil consumption. If I have to fix it, I will have to replace the piston rings and related parts/labor for $3,500. I could fix some optional cosmetic damage in the forms of scraps.

1. At what point does it not make sense to fix it?
2. At what dollar amount for a trade-in should I jump at?
3. At what point should I just drive it into the ground?

The goal here is to spend the least amount of money all by having the best trade-in value.

Answer 1

My daily driver is a 2008 Accord with well over 200k miles on it. If I was you, I would get a second opinion on the fix. Honda's rarely require that kind of maintenance so early in their life.

If I was you, I would check the oil myself and add as necessary. You could set an appointment on your calendar app to remind you to do it every week. Lets say it is burning oil, mine does, and I add a quart about every 2 months or so. Big deal, that cost me like $25 a year.

You already paid over 10k on this car in deprecation. When did you buy the car? I am sure over that time you could have used an extra 10k in your pocket. Now if you have investments on the order of 500k or more, that 10k lost tends not to be so painful as your investment growth would have made up for that.

So unless you have significant assets in investments, I would keep this car as long as possible and work to build your assets where you can drive whatever the heck you want.