A grinding noise is the second most worrying thing to hear coming from under the hood of your car. It’s bested only by a loud explosion or seeing flames shooting from the front of your car.

But a worn-out transmission is exactly what I’ve been dealing with in my 10-year old sedan these past few weeks. Whether it’s on the freeway or around town, there’s a constant grinding noise when the transmission is in second gear.

Obviously not me. But that’s a nice $50,000+ car I’d like to own. (Courtesy markcartwright on Flickr)

While I’m trying to nail down a time to take my car into the shop for service, the good folks over at the Financial Edge blog at Investopedia put together a great checklist to follow on when to “Fix It or Trash It?”

Their advice in my situation? “As long as your old car is reasonably fuel-efficient and the repairs are less than 25% of the value of the car, and as long as the mechanic feels it is otherwise sound, it is worth repairing rather than buying a new car.”

Well, I’m golden for only one of those three points.

Strike one: my car is worth about $3,000 while the potential cost of my repair is approximately $2,000. (Repair = 66% of the value)

Strike two: this car averages 15 mpg in the city, 20 mpg on the highway and 18 mpg combined. Eek! Did I mention it takes blindingly expensive premium 91-grade fuel?

Strike…well…ball one: the mechanic believes this ole’ clunker could run to the moon and back if I would just fix the transmission. (Easy enough for him to say, right? He’s not the one paying for it!)

And! Major point here…the car is fully paid for.

The latter statement is very important. I would actually make the argument that not only should people take into consideration the cost of the repair, but also the cost and burden of a new car payment. Of course I’d love to be riding around in a nice new car. But the reality is, I would much rather be making payments on a $2,000 repair (if I had to) than on a $20,000 new car or a $10,000 used car.

I’ll be sure to keep you up-to-date on what happens, but in the mean time, here’s to hoping that my car can survive this open-heart surgery and live to see another few years of life.

Be sure to check out the entire article over at the Financial Edge blog on Investopedia on whether to fix or trash other items, such as household appliances, clothes and computers and electronics.

Become Money Smart!

Sign up to hear the latest news and advice from 2MF about your money.