Keep your old clunker or buy a new car?

It may clang and bang, but your despised old car may be the best bargain around.
Let's divide the car-buying universe into two camps: those who keep a car until it drops, and those who think a new car will change their lives.
To the first, a round of applause. There's nothing short of the bus that's cheaper than keeping a car until it crumbles into a pile of rust. Almost any car can be nursed to 200,000 miles without endangering your life, and even a new engine is cheaper than all but the cheapest used cars.

It no longer fits my life. You may have taken up gardening in a big way but still own a Corvette.  Your little Accord may be a tight squeeze when family comes to town. The answer to all: Rent.  Even at $180 a weekend, renting is far cheaper than a car payment. Plus you get to drive the very latest without worrying about insurance, license tags, maintenance or depreciation.

Those repair bills are really adding up.  Does the cost of repairs exceed the cost of a new car? A typical new car is around $28,000; that's about $475 a month for five years after 20% down. A rebuilt transmission might run $1,800, but far less than the $5,700 a year you'd spend on new-car payments alone. In any case, anybody with a car older than three years should be tucking aside $50 a month for repairs and maintenance.
  
I'm nervous driving an older car. You might simply spend $56 on a AAA Basic membership and carry a cell phone, reminding yourself that even new cars aren't immune to mechanical failure. The upside of frequent breakdowns is that you'll get to know mechanics quite well. Find one you like. Flatter him.  And the next time he fixes your car, ask him to take a few minutes to see what else will need repair soon. 

The repair costs more than the car is worth. A $1,500 engine rebuild that keeps your '83 Toyota on the road still makes good financial sense. It's at this point, however, that all but the flintiest drivers begin to think about upgrading.