I owe $13,000 on my car, but it suddenly needs a new $9,000 engine — I can’t afford that. What am I supposed to do now?
Aditi GangulyMon, September 14, 2026 at 1:45 PM GMT+3 9 min read
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Cars have become a huge burden for many people, with the average monthly payment for a new vehicle coming in at $770 in the first quarter of 2026 and the average payment for a used car totaling $531 (1).
And that's just the base cost of ownership — that doesn't even include the cost of gas, insurance or repairs. With such high prices, it shouldn't come as a surprise that over half of all drivers (58%) admitted in 2025 that they couldn't afford a car repair costing $1,000 or more (2).
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Unfortunately, if you're one of those Americans, you may find yourself facing a difficult choice if you have a vehicle that does end up requiring expensive repairs. Let's say, for example, that Samantha has a car she owes $13,000 on and it's worth about the amount she owes.
Unfortunately, the vehicle needs a new engine, which she can't afford, as it costs $9,000.
The good news for Samantha is, unlike close to 30% of Americans turning in their vehicles, she's not underwater on her vehicle (which means owing more than it's worth) (3). But since it's worth the amount of her loan, she can't sell it at a profit and walk away either.
She's facing an impossible choice: fund repairs she can't afford that cost more than half the car's value, or buy a new car, which could be an even bigger financial burden.
When does it pay to make a costly repair?
The first thing Samantha must decide is whether the repairs are even worth paying for. And the answer may not be what you'd expect.
"If a car is worth $13,000 and needs a $9,000 engine repair, don't make the decision based on those two numbers alone," Alan "Ollie" Gelfand, automotive repair expert and founder of German Car Depot in South Florida, told Moneywise. "Look at the condition of the rest of the car and its maintenance history. Is the mileage low? Is the transmission good? How about the suspension and electronics? Does the replacement engine come with a warranty?"
Gelfand explained that if the car is in excellent condition and buying a dependable used car would cost the same or more, it may be worth making the investment to keep it running. "But if the car also needs a transmission, has neglected suspension, is rusty, or will require other costly repairs soon, then the $9,000 engine repair may only be the beginning," he warned.
Samantha should also consider why the repairs are necessary and what they'll involve, as that could affect the likelihood that she'll need to make further fixes.
"If the prior engine failed due to overheating or insufficient lubrication, additional repairs may be needed, including possibly replacing head gaskets," Luke Oswald, an automotive specialist at Wheels Away, told Moneywise. "It's also essential to know if the replacement engine is new, has been rebuilt or refurbished, or is several years old."
If the car is otherwise in good condition and the new engine is likely to keep it on the road for a long time, Oswald agrees that the repairs may be worth paying to avoid spending even more on a new car — especially if Samantha already feels short on cash.
"If you're familiar with the car's past, the rest of the car is OK and buying a new one will cost much more, then fixing the engine could still make good sense," Oswald said.
How to pay for car repair costs you can't afford
Whether Samantha decides to repair her car or get a new one, she's still facing the same big problem: Neither option is affordable.
Eric Croak, CFP and president of Croak Capital, suggests first looking for ways to slash engine repair costs to bring them within budget.
"Dealers on new engine quotes are going to be at the high range of pricing," Croak told Moneywise. "Remanufactured, engineered or a low-mile salvage engine quote from your independent shop will be $3,500 to $5,500 on average and you can obtain quotes in a day or two tops."
As long as Samantha can find a trusted repair shop that offers a reasonable warranty, trying to lower repair costs could make sense (4). And if she still can't cover the cost, Croak recommends taking "a smaller loan via credit union" to keep borrowing costs down. This could be a more affordable way to fund repairs than a credit card, which often has a much higher interest rate.
If Samantha decides to replace rather than repair, looking for the most affordable, reliable car becomes important. "When looking for a new car, don't limit yourself to cars that cost $10,000 or more," Melanie Musson, an auto finance expert with AutoInsurance.org, told Moneywise.
"You may be able to find a reliable, high-mileage vehicle for $3,000. It doesn't have to be your forever car. It just has to get you by until you can afford to upgrade."
The important thing for Samantha will be to carefully consider whether she'll get the best value from making the repairs or buying an affordable used car — after taking into account both cost and future repair risk. Once she decides on an approach, finding an affordable way to finance the costs can limit the damage.
There are a couple of more options, too.
Consider refinancing
A $9,000 engine replacement is a far cry from the typical car repair bill. But vehicle owners are used to shelling out some money every year to maintain their vehicle. Americans generally spend about $400 to $1,200 a year maintaining their cars, according to RepairPal data published by Consumer Affairs (5).
Unfortunately, even those everyday costs have been climbing. Vehicle maintenance and repair expenses increased 6.1% year over year in May 2026 (6), after jumping another 15% the previous year (7). So while a blown engine may be an extreme example, it's a reminder that keeping a car on the road can put a growing strain on a household budget.
You may not be able to predict when an engine, transmission, or other major component will fail. What you can do is look for ways to make the rest of your car budget a little easier to manage. If your auto loan is eating up a significant chunk of your monthly income, refinancing could potentially lower that burden.
Refinancing may allow you to replace your existing loan with a lower rate or different repayment terms. Americans who refinance their auto loan save an average of $1,346 over the loan's lifetime. Those who refinance into a shorter loan term can save even more — an average of $6,291 over the loan period (8). That could give you more cash to put toward a major repair — or, once the immediate problem is dealt with, build an emergency fund specifically for future car expenses.
So before assuming your current loan is the best deal available, it may be worth seeing whether another lender can offer better terms.
LendingTree lets you shop around and compare rates offered on auto loans by reputable lenders near you.
You can find rates as low as 5% APR in just three simple steps. Once you fill out their form with some basic information about yourself and the vehicle you'd like to refinance, LendingTree will match you with up to five lenders that best fit your financial profile. From there, you can choose which offer you'd like to proceed with.
The best part? This process is completely free and it only takes a few minutes.
Lower your overall car expenses
Refinancing isn't the only way to find some room in a stretched car budget. Insurance is another recurring expense worth a closer look.
Auto insurance rates have surged in recent years, but a higher bill doesn't necessarily mean you're receiving better coverage. Your insurer can raise your rate even if you've never filed a claim or had an accident and years of loyalty don't necessarily translate into a lower premium.
That's why it can pay to shop around before your next renewal instead of simply letting your existing policy roll over. If you find comparable coverage for less, you can redirect those savings to your car emergency fund.
Comparing rates through services like Insurify can help you uncover cheaper options.
Here's how it works: Just answer a few basic questions and Insurify will show you the most affordable deals in as little as three minutes. Those who shop around and compare car insurance rates from different providers on Insurify and choose the best available deal save $1,100 on annual premiums on average.
Not only is the process 100% free, but you could also save up to 15% by bundling your car and home insurance.
- With files from Christy Bieber.
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Article Sources
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Experian (); FinanceBuzz (); Edmunds (); Nealey Tire & Auto (); Consumer Affairs (); Empower (), (); LendingTree ()
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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