It sounds like it’s time for a new car in your situation. I’m not certain how you’re calculating a monthly maintenance cost, but I’ll assume that it’s a long-term average. In my case, I’ve found that car repairs are large and sporadic.

Clearly, one of your big considerations is fuel cost. I would weigh the cost of a new Prius against that of an older car. For example, the Prius is $600 for car + $200 for fuel, while an older car might be $300 for car + $400 for fuel. In that case, you might still be better off with the older vehicle.

You have two more considerations: how long you’ll keep the vehicle and your wife’s tax situation. Since you’re planning a long-term relationship with the new car and your costs are deductible up-front, the Prius isn’t looking so bad.

One last thing – don’t forget the cost of maintaining a hybrid vehicle!! I’ve had someone run the numbers for me before, and replacing the battery every 3-5 years is a BIG cost.

I would have to side with your husband on this one. It’s very likely that your A/C bill, although large and unexpected, is still much cheaper than a new vehicle.

You have to consider a number of the things I outlined, including the relative convenience and reliabilty of new vs. old, what you have room in your budget for, and locking in to 3-5 years of future payments.

Part of the problem for many of us dealing with the same issue you are is that the psychology changes when we go from regular, monthly payments to “maintenance” mode. We think that because payments are over, we don’t need to put money towards the car. Unfortunately, that’s usually not the case.

Although you usually don’t need to put in as much as you were paying for your car loan, I recommend starting a “car fund” and paying 25-50% of what you used to, depending on the age of the vehicle, warranties, expected reliability, etc.

Sooner or later, you’ll need to use that money and most of the time, it will be in big chunks and it will blindsight you. Without this fund, you’ll ‘feel’ like you’re shelling out huge sums of money.

One last tip: look at your car expenses on an annual basis. How often do you repair it? What do you spend? If over the course of a year, we spend $2,000 on our car (sounds like a lot), that’s about $167 per month (a puny little itsy bitsy car loan).

A lot of things to consider…certainly not an easy decision. Best of luck!

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