Reader Questions - Penny Guzzler, Repair or Replace?

Get Penny Wise reader Bill has written to us with a question that many of us might be facing - what to do when faced with repairing an aging car? Are there any 'breaks' to be found out there? How about when it comes time to replace it? A $5 magazine subscription is all well and good but Bill needs the meat and potatoes version of savings.

We have two options for Bill - repair or replace.
Repair
Bank of America has a great promotion through their Add it Up program where you can receive 6% back on your first car repair totaling up to $2,500. Your car or truck to be serviced at a participating auto dealer or service center with a registered credit or debit card. One the site you can enter your zip code to find participating merchants near you. If you don't have a Bank of America account now is the perfect time to open one - a free my access checking account currently comes with a $75 bonus which then jumps to $100 when you pay two bills online. (Look for an upcoming review with all the details.)

If Bill's repair is $750 he would earn $45 in cash back and if he opened a new account that would save him another $100 bringing his out of pocket total down to $605 with a savings of $145.

Replace
Maybe after running the numbers Bill decides he doesn't want to invest $700 into a car valued at $3000. Perhaps it's time to replace the car. The government has a program to get old, gas guzzling cars off the road called CARS, Car Allowance Rebate System. This program, more commonly and affectionately known as cash for clunkers, could earn Bill $3,500 if the new car he purchases gets 4 mpg more than he is currently getting. If Bill finds a car that will get 10 mpg more than he is currently getting he'll qualify for a $4,500 voucher towards the purchase of a new car. This is instead of a trade in so be sure that the amount of the voucher is more than you would receive for a trade-in. Check out a list of eligible cars at Edmunds.com.

                                                                                             

If Bill springs for a new car he would make the most of his money if he purchased a hybrid or alternative fuel car with a government tax credit. Here's a Get Penny Wise Tip - do you research before you shop; you can reap up to $4,000 in tax credits depending on what car you choose.

                                                                        

If Bill utilized the government's money with a tax credit for a hybrid or alternative fuel car and maximized the cash for clunkers program he could have $8,500 (from the government, no less!) toward a new ride!

What would you do - repair or replace? Tell is in the comments.