Singletary: If your car still runs, hold off on replacing it

Even so, we’ve started having the conversation: When is it time to let go?

When it comes to people’s budgets, the cost of transportation — mostly the ownership of an automobile — is typically the second largest expense behind housing. People in America love their cars. And they are in and out of debt as a result.

The average price for light vehicles in the U.S. was $35,444 last month, according to estimates from Kelley Blue Book.

“The numbers indicate that new-car buyers are still willing to pay top dollar for the latest models with the most current features and technology,” said Tim Fleming, analyst for Kelley Blue Book.

But it’s because of the high costs that many consumers are continuing the trend of holding on to their vehicles longer than ever, according to IHS Markit, a leading provider of business information and analysis for the auto industry.

The average length of ownership was a record 79.3 months, as of the end of 2015 — more than 1.5 months longer than the previous year — and nearly 66 months for used vehicles. Both are significantly longer lengths of ownership than a decade ago, IHS Markit said. The average age of automobiles on the road in 2015 was 11.6 years.

During my weekly live chats with readers, I frequently get asked whether a car should be fixed or traded in for a new or late-model used car.

“Took my car to the mechanic and it turns out it’s the transmission and will be about $2,000 to $3,000 to repair,” one reader wrote. “We have the money, but the car is 13 years old. We could afford to buy a car now in cash, but that would wipe out our savings account. I’m hesitant to do that since we just bought a house. So, I’m leaning toward fixing it and continuing to save for a car, but am curious what your thoughts are? Usually there seems to be a clear ‘do this’ answer for me in making financial decisions, but for this one I’m just not sure.”

Here’s what I commonly hear from readers on how they decide whether it’s time to give up on their cars: When a particular repair costs more than the market value of the vehicle, it’s time to replace it.

I think this rule is shortsighted.

When it comes to an older car, especially one that still runs well (once repaired, of course), you should look at more than just the Blue Book value. Consider all the replacement costs — including insurance, taxes on the purchase and interest if you have to get a loan. Even if you’ve got enough money to pay cash, consider the consequences or “opportunity costs” of depleting your savings, Kreisler says.

Here’s my rule for when it’s time to let go: If breakdowns become frequent, unsafely stranding me on the road, she’s gone.

However, as long as my vehicle is safe to drive, and repairs can be planned, she stays. I’m keeping Betsy because it’s still less expensive than replacing her. Besides, the longer I hold on to her, the more I can save to pay cash when the time comes to say goodbye.

Michelle Singletary welcomes comments and column ideas. Reach her in care of The Washington Post, 1150 15th St. N.W., Washington, DC 20071; or singletarym@washpost.com.