If the repair costs what the car is worth, it is not a repair

Usually not, people say — and before you decide, they want the diagnosis checked, because theirs were wrong more than once. Some people say the rule: when a major repair approaches or exceeds the car’s market value, paying it is financially irrational, and the car should be sold as it stands, scrapped, or used as a deposit on a replacement. People argue the edge across some discussions: one person says fix it if the car is otherwise reliable, because a new loan and payment cost more than a repair; some people say a bill that size is the car telling you its life is over. People’s decider is whether the rest of the car is sound and whether you could carry a payment at all. The mistakes people caught are the useful part. One person was told an engine was destroyed by a broken belt; some people say that model of that era likely has a timing chain, not a belt, and another says the fault turned out to be the serpentine belt — a bent valve aside, the engine did not need replacing. One person says the quoted price was dealer pricing when a used engine from a breaker’s yard costs far less; people argue whether the quote was padded or simply what parts and labour cost now, some people on one side and one person on the other, and whether an engine of that family is worth replacing at all — some people say a used engine can make it worthwhile, and some say the model’s known faults make it money in a hole. One person points out a hundred and eighty thousand kilometres is not a worn-out car by today’s standards. One person warns the diagnosis is everything: a head gasket and a full engine are wildly different bills. Others add: a dealership charges far more than an independent shop and is not more competent; get more than one quote — one person says they were quoted higher and treated dismissively as a woman, and the answer for anyone is several quotes; regular maintenance is what prevents this bill, which is a lesson for the next car; and if the car is your second home in a hard year, some people say sentiment is a reason to fix it cheaply, not a reason to pour money in. If you sell, one person says part it out or sell it as-is for a deposit on the next one, and people weigh, one person on each side, a private sale of a non-runner against a car-buying service.

Everything, because you may owe more than the car is worth, and people have been under that water. Some people say the way out of car debt for good is to pay cash next time or pay this loan off fast, because interest on a thing that loses value every month is the trap; some people say the practical move when the loan is bad is to refinance at a lower rate, usually through a credit union — the page on this site about credit unions is the door. Others fill in the mechanics: a car depreciates the day you drive it off, so a long loan leaves you under water — owing more than it is worth — for most of the term; if you sell while under water you need cash to cover the gap, and one person took a personal loan for the difference so the sale could go through; check the contract for financed add-ons — an extended warranty, gap cover — that can be cancelled to cut the balance; and pay down principal to build equity before you refinance, because one person warns lenders usually want positive equity before they refinance. Some people warn gap insurance matters exactly here: if the car is totalled while you are under water, you owe the remaining balance and need a new car, and gap cover pays the difference. One person says the monthly figure is not the payment but the payment plus fuel plus insurance, which is the number to compare against your income. The limits: no deposit as big as the car; no co-signing a refinance; and do not sell the car back to the dealer immediately, because one person warns you will get far less than you financed. And the line from public guidance above: handing the car back does not hand back the debt.

In the US that depends on your state, and people agree on the ethics and divide on the law. Many people say rates in the mid-twenties to mid-thirties per cent on a car loan are predatory — one conversation’s example was a very old, very high-mileage car financed at thirty-four per cent, at a price one person warns was far above its value — and that a loan like that should be avoided or exited. Some people say rates like that are usurious in some jurisdictions, and some say some states cap rates or bar loans of this shape, which may give the borrower a remedy; which states, and what the cap is where you live, is a gap people named, and your state attorney general’s consumer office is where the answer is. People argue, some people on each side, whether the example was illegal usury or merely a bad and legal deal, and whether the dealer or the buyer was responsible — this page carries that as an argument and ranks nobody. Mistakes people caught keep the arithmetic honest: the cash price of a financed car includes the deposit, not just the amount financed; and a zero-per-cent deal is rarer than it looks — some people say even strong credit usually gets a small rate, and one person suspects the interest was priced into the car. One person works a rate back from the payment and term and finds it higher than the borrower was told, which is why the whole-loan sum on the payday page applies to cars too. People argue whether thirteen per cent on a new reliable car is ‘criminal’ or a decent outcome for weak credit — some people say criminal, and one person says decent, given what used-car lots charge. Individual people explain the market you may be in: buy-here-pay-here lots profit from the deposit and the repossession; for people without transit and with poor credit these loans are sometimes the only offer; used-car prices were inflated at the time and one person warns the example still sat far outside the norm. One person says the buyer also failed to check the car’s value first — which is the one thing this page can hand you before the next signature.

People argue this at length and the deciders are worth more than the verdict. Some people say that once the payment no longer fits, or the car has become a hole for money, a private sale or handing it back beats bleeding on — with the public-guidance line above about what a surrender leaves you owing. Some people say sell now and take the loss, because the payment was too high for the need in the first place. The argument in full, from one discussion, on a large vehicle at zero per cent that the owner could pay but could not save alongside: some people say keep it, because at zero per cent paying it down costs nothing extra and selling realises the depreciation as a loss; some people say a payment you can make but cannot save alongside is unaffordable in all but name, and one person points out that a long term at zero per cent is not a ‘horrible’ loan because the term adds no cost. People argue the same axis on other cars in other discussions, and people’s deciders vary: how far under water you are, how stable your income is, and whether you can take a short-term hit to fix a long-term drain. One person warns selling now can lock in a loss when the market value sits well below what was paid, and another person warns that selling requires cash you may not have for the gap. People argue, some people on each side, whether a bad car loan is a catastrophe or a common mistake with a clear fix; the fix side says refinance, cancel the add-ons, pay down principal. Individual people on the keep side: cut other spending hard; take side work the vehicle enables; prove you can save the full amount for months before the next big purchase; and one says a payment that takes a fifth or more of take-home pay for a depreciating thing is the problem, whatever the rate. One person warns a car that dies before the loan ends leaves you paying for nothing — which is the repair-versus-value sum from the first question, applied to the future.

Rarely, and people asked the legal questions more than they answered them. One person says you cannot return a new car because no state requires it, and another says check your state’s law for any window before you ask the dealer; this page checked the general position: the US Federal Trade Commission says there is no federal cooling-off right for a vehicle purchase — the contract binds when signed unless the dealer or your state offers a return policy. Some people say that where a state caps rates or bars loans of this kind, the contract may be voidable or the borrower may have a remedy; what the specific law is where you live, what recourse a borrower has, and how to negotiate a lower rate or a payoff with the lender are gaps people name and never fill — a legal-aid office or your state attorney general’s consumer line is where this page hands you. What people could do without a lawyer: refinance elsewhere when the equity allows; cancel financed add-ons; sell with the gap covered; and, as a last resort, surrender — knowing from public guidance that the debt and the credit damage stay. The one route this page will not carry is the one someone raised and dismissed in the same breath: damaging the car for the insurance is fraud. For the loan that was predatory from the start, the page on this site about high-interest lending carries the whole-loan sum and the alternatives; for the payment you can carry but resent, people who kept a zero-per-cent car and paid it down have their case in the fourth question.