Either my car needs a new engine, or I need another car. How do I know which one I should do?
QUESTION: Laverne has an 8-year-old car that had the engine die. Her mechanic can put in a new engine for $3,400 with a 3-year warranty. She has $1,000 in credit card debt and makes $1,200 a month. Should she put the engine in there?
ANSWER: If that car is a $2,000 car after it’s fixed, then you don’t want to put a $3,000 engine into it. You’d want to take that $3,000 and buy a car instead. I’d rather drive a $3,000 car than a $2,000 car with a $3,000 engine in it. But if you have a $7,000 car, then you put a $3,000 engine into it.
Find out what the car is worth if it was running at kelleybluebook.com. If it’s worth less than $3,000, then don’t put that expensive engine into it. You might also try to put a used engine in it. Don’t worry about the warranty on a $3,000 engine.