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Help! Repairs cost more than the car is worth!!

cheapman1cheapman1 Posts: 6
edited March 15 in Mazda
My wife and I have a 1997 Mazda 626 with about 80,000 miles on it. It started having transmission problems, so we took it to a national chain for inspection.

The $50 inspection revealed nothing, so they had to seek our approval to open it up. They estimated the cost of repair to be around $2,000 if there was significant damage, around $1,000 if the damage was minor, and a flat $550 fee just for opening it up. We decided to go ahead with the inspection, hoping that it would come back with only minor damage.

Well, it turns out the car had major damage and now their estimate is around $3000!! This is about the same as the car is worth at trade in.

We're seriously considering eating the $550 and taking the car to a dealer as a trade-in. But we're not sure if this is the right thing to do, as we'd end up spending more cash out-of-pocket for a new vehicle, and we're trying to save for a house.

We're looking for people's opinions here. Our questions are:

1. Would a dealer even be willing to take this car, assuming it leaked transmission fluid and has severe transmission damage?
2. If so, would we get anywhere near the blue-book value for it?
3. Would we be smarter just to fix the transmission and hope the car can last another 5 years or so without another major repair?

Thank you very much for your opinions and wisdom. Your insight is appreciated, as we're torn and don't know what we should do!
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Comments

  • If your car is only worth $3k then don't spend another $3k on repairs. Unless of course the car has some sentimental value. The car has negitive value to a dealer as a broken trade-in. Consider paying a little more and buying a better (newer) car.

    Stay away from the national transmission shops. Their prices are double what an independent shop charges. (Guess who ends up paying for all of that national shop advertising).

    Consider a junk yard (ie. used transmission) from a wrecked or engine-challenged car. Some of the independent transmission shops can help you here

    Consider playing the car donation game. You donate the worthless car to any charity and then take the retail Blue-book tax deduction.
  • zueslewiszueslewis Posts: 2,353
    have a regular mechanic you trust (ask your friends/coworkers), talk to them about the deal, get a decent used tranny from a salvage yard, and have the private shop guy install it. You're out about $1,000 dollars more, parts and labor, give or take a few.

    Much less than $3,000 and the car is worthless when it's broke.
  • dbgindydbgindy Posts: 351
    On a charitable contribution of a vehicle you can only take what the car is worth at the time of donation. If the car is worth $3000 at trade in in good working order it's probably only worth a couple of hundred (if that) in it's present condition.
  • zueslewiszueslewis Posts: 2,353
    to keep the charitable organization out of trouble.
  • Does that mean that the dealer would find the transmission problem, and not accept the car at the "below average" blue-book condition value?

    We were assuming they would, since they have their own mechanics, and could sell the car for around $6500 once it was fixed. We've chosen not to consider reselling to anyone but a dealer, since we don't want to be responsible for sticking someone with a lemon.

    If the national transmission chain is telling us it's a $3000 fix, I'm thinking the dealer's own mechanics might be able to fix it for something like $1000, which means that at a trade in value of $3000 they'd be looking at a net gain of about $2000 on the car.

    However, I'm certainly no expert in the used-car industry, so I have no idea if my assumptions are correct.

    We're not inclined to donate the car to charity, since we think with a new or repaired transmission the car should have a few good years left. According to Consumer Reports, the 626's have been pretty reliable overall, and this is the first major problem we've had with it. For these reasons, we're really only debating between fixing it, or trading it in and replacing it with a newer (used) vehicle.

    Thanks again.
  • zueslewiszueslewis Posts: 2,353
    take a presently-broken car, no matter what - you're asking them to assume that's the only thing wrong with it - what if they estimate $2000 and it turns out they need some weird part that costs and extra $1000?

    It ain't happening, sorry. Dealers take enough chances on a daily basis to know better than to sign on for a guaranteed loser deal.

    Also, even if you car was running great, it would be wholesaled because of the year and miles. In 99% of cases, you can't write a warranty on a 80K-plus vehicle and most lenders won't finance anything over 5-6 years old.
  • rroyce10rroyce10 Posts: 9,359
    ... >> have a regular mechanic you trust (ask your friends/coworkers), talk to them about the deal, get a decent used tranny from a salvage yard, and have the private shop guy install it. You're out about $1,000 dollars more, parts and labor, give or take a few. <<..

                     Bingo .!

                Tranny shops are NOTORIOUS for the hit and run jobs .. $3 grand ..? sure, if it's 99 Jag XJ8, not a 626 ...l.o.l..

                        Terry.
  • zueslewiszueslewis Posts: 2,353
    the transmission in an all-wheel drive Dodge Caravan for $1700, parts and labor - you can rebuild it for $1200.

    $3K is hogwash.
  • Dbgindy et al:

    I know that you are SUPPOSED to only deduct the actual value of what a car is worth. However, cars worth less than $5000 do not need to be appraised so nobody will challenge you on it's value. So if you have a broken car (that is worthless) and a retail value of say $3000. Then you could donate it and take say $3000 off of your income and pay maybe $1000 less in state and federal taxes (assuming a net tax bracket of 33 %).

    I am not advocating this approach, I just know of several individuals who have used this very popular tax-based approach.

    This popular approach is no more immoral than selling a broken car to the unsuspecting.
  • Friends of mine donated their Mazda MPV to the Kidney Foundation and deducted $4999. I don't know what this was based on (retail KBB?), but the advisory given to them by NKF indicated the need for an appraisal if $5K or more was claimed.
  • "This popular approach is no more immoral than selling a broken car to the unsuspecting"

    Yes, they are both immoral but the former is always ILLEGAL, wheras the latter may not always be illegal.

    prophet2-The NKF was quoting the IRS code to your friends. Probably nothing wrong with declaring the value at $4999 to avoid the hassle of getting an appraisal as long as the market value was at least that much. But I wonder why they couldn't just do a used car price check from Edmunds, print out the page, and keep that for their documentation in case of an audit?
  • >>I know that you are SUPPOSED to only deduct the actual value of what a car is worth. However, cars worth less than $5000 do not need to be appraised so nobody will challenge you on it's value.<<

    As a CPA licensed in Ohio and Illinois, you are DEAD wrong. In each of the past two years, I have received bulletins from the Cincinnati and Chicago offices that donation of used cars was "an area of potential abuse" that would require additional scrutiny from the IRS. Thanslated into plain English, if you contribute a car and declare it on your Schedule A and the related charitable contribution forms, you are MORE likely to be audited.

    What you are advocating is fraudulent, period. Sure, you MIGHT be able to get away from it, but then again, matbe not. Personally, I would prefer NOT to be audited.

    I advise my clients not to contribute their beaters to charity. I tell them that it is more advantageous to sell the car for below book and pocket the cash or give the cash to charity.
  • I was not advocating the donation method. I was just explaining this widely used strategy.

    By the way, remember when Clinton's taxes were released. He had "donated" his USED underwear and deducted $2 a pair for his used tighty-whiteys.
  • Only $2 ???

    I am sure that the plaintiff bar would be willing to spend a whole lot more (g).
  • rroyce10rroyce10 Posts: 9,359
    .... >> if you contribute a car and declare it on your Schedule A and the related charitable contribution forms, you are MORE likely to be audited. << ..

             Just like those big flashing lights on the side of the road, it pulls the IRS's attention, it's in their top 10 "wanna come and see ya" list .. tread carefully and carry a big CPA ...

                          Terry :-)
  • KCRamKCRam Mt. Arlington NJPosts: 3,516
    That $3000 sounds like parts and labor to search out and repair indivisual components what they think are bad. The other posts are right, just pull it out and swap in a working trans for MUCH less.

    kcram
    Host
    Smart Shopper and FWI Message Boards
  • Actual market value for most Mazdas tend to be less than guide books like KBB and NADA. Older MPVs have had brake and transmission issues as evidenced by vehicle recalls. I couldn't see anyone paying $4999 for one that age, regardless of KBB.

    Red flag territory? You betcha!
  • dbgindydbgindy Posts: 351
    jlawrence is exactly correct. Trust me it's not worth it.:-)
  • 18fan18fan Posts: 147
    Several years ago, I donated a broken, worthless used car to the local volunteer fire dept. They actually cut it up.... with saws, jaws of life, etc. Used it to train firefighters how to extracate people from cars in wrecks.
  • I also have a 1997 Mazda 626 whose transmission is on the outs. I have no second gear. I have found the same situation as you are. The value is less than what it costs to repair it. I have found that it is an expensive car to drive because of the maintenance costs- brakes- 4 times ( I have 103,000 miles) and I need struts- 4 at a cost of over $700. Transmission at $2,200. Ouch! I have a sneaky suspicion that there are some major problems with that year and model's transmission. The guy at the dealership told me that the day I brought it in for a transmission check there were 2 other same make year and model Mazdas in for the same problem. I've checked Mazda's website for recalls but nothing. They don't post technical bulletins so I have no idea how bad a problem this is nationwide with the 1997 626's. I will probable end up giving it to charity.
  • dsattlerdsattler Posts: 135
    The NHSTA posts them, as does alldata.com, as I recall.
  • NHTSA, not NHSTA - don't want someone misgoogling.
  • dsattlerdsattler Posts: 135
    ...sorry. Damn Internet: spelling counts. When I become king...
  • Not that I have anything against the New Hampshire School Transportation Association or anything. :)
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,897
    Sounds like this "national chain" has pumped up the price on this repair. Unfortunately, I wish you had come to us first before laying out the inspection fee, because that is the trap right there. If you think about it, what can you possibly say to a shop when you've already "invested" $500 and they ask you "what do you want to do?"

    With a bad transmission, this car is practically worthless. I have no problem with the donation route as long as you have a good printout of your car's retail value. Even IF you deduct the price of a used transmission installed (about $1,500), and thereby being perfectly honest, you will still show a KBB value near $5,000.

    That is correct, you must have an appraisal if you declare over $5,000, so try to stay under that.

    Depending on your tax bracket, you might end up with $1,500 in your pocket for a donation approach, which is probably more than you'll get trying to sell the car as is.

    Speaking of used transmissions, have you explored that route as a cost-saving compromise?

    MODERATOR

  • hjahja Posts: 8
    My 1998 Mazda 626 loses power when the A/C is on and the driver changes into Park. When the car is in Drive or any other gear, there are no problems with the A/C. As soon as I switch to park with the A/C on, the RPM's go way down (the car almost dies) and barely stays on. Any suggestions?
  • thelthel Posts: 767
    I'd suggest posting this in the Maintainence and Repair board or on of the 626 boards. I think you missed the point of this thread...
  • koolkatkoolkat Posts: 2
    I bought 98 626 1.5 yr ago for 6.5K at 50K miles in pristine condn 1 owner.
    Thought it was good deal. Has been giving AT check
    engine light occasionally. TOok to Natl AT chain,
    came up with 1.8K min 2.6K (with Torq convt) estimate. Have it in today in a indep AT shop for 1.8K rebuild. Wish I had read this post and gone the put in used AT route. This car sucks and is
    not a good buy even w/ lower price. Especially since I have had Toyotas that ran 160 and 130K w/o any transmission problems.
    So donation route or repl with used is way to go. Also in Nor CA I dont see any ads for cars with prices as low as what is in TMV or KBB midpoint.
    (see autos.yahoo.com) Priv parties seem to ask
    for more than TMV and are getting it in this area.
    SO u can use slightly higher valuation of u document current listings in newspapers or online
  • This might possibly be the wosrt scenerio that you have heard.....
    Our credit is not good... Around the 500 mark. We had a BK back in 2001 and since have struggled so much its been nearly impossible to raise it much. My car just died and it will cost around $4000 to fix it. Here's the real kicker... We still owe $5000 on this car! So fixing it is out of the question, even if we did have the money. (Which we don't!) So here is what I have to walk on a dealership with:
    *Bad Credit
    *No $$ for down paayment
    *Exhisting vehicle for possible trade-in not running
    * Still owe $5000 on this car
    *Can't afford a payment more than what we pay now, which is $250.

    **So basically its like, "We need you to pay off our exhisting loan, take this car that needs fixing, and give us a new car, all while keeping our payments around the same. ($250)

    Is there any hope at all for us? I have read other questions on this forum. Some others are in better shape than us, and have been told there's not much hope....

    Would a dealership possibly discuss a lease with us? Should we give up now?

    Any advise would be appreciated. Thanks for your time.... I know this is probably the worst anybodys ever heard....
  • grbeckgrbeck Posts: 2,361
    Can you get another opinion on how much it will cost to fix your current car? Did the $4,000 figure come from a trusted mechanic? Make sure you aren't getting gouged.
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