Considering a new car

I've always thought it economical to defer that new car purchase by maintaining the one I have. Tom & Ray at Car Talk say "there is nothing cheaper than running an old car into the ground.... It's NEVER cheaper in the long run to buy a new car." But I keep wondering -- how do I know when I've officially "run it into the ground," i.e. when it's not economical to keep maintaining it?

When
* You worry too much about being stranded or seriously inconvenienced -- like missing a plane, or
* It spends to much time in the shop, or
* The repair/rental cost in any 6-month period exceeds the cost of 6 months depreciation on a new car, and is likely to continue to do so. E.g. when the body starts to go.

"Here's a standard rule of thumb about used cars. A car loses 15 percent to 20 percent of its value each year," [Bankrate.com] There's also the interest cost on the loan, which is roughly 6% per year. If you live in a state that calculates the registration based on vehicle value, it'll cost you that rate, e.g. 1%. If you have to pay sales tax on your car (we don't) there's also that cost - right out the window in year one, though you might amortize it over the car's expected service life.

In a no-sales-tax state, six months depreciation, interest and registration on a $30,000 car would be at least 11% (i.e. (15+6+1) * 0.5). or $3300.

You could argue that 15% "year one" depreciation is an excessive charge if you always keep your car 8 years. But it's still 12.5% compared to the 15% we used.

My 10-year-old Lumina APV van still has some depreciation cost, but not much. It looks to have a private sale value of about $1000, and a trade-in value of about $500.

Edmund's Automobile Buyers Guide, AutoSite, Kelley Blue Book, CarPrice.com and NADAguides.com are among the sites offering timely pricing information as well as shopping and negotiating tips. [Bankrate.com]

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Wow, I've been looking around the Car Talk site and it is has some great articles, including a spot where you can recommend your favorite local mechanic.