: Size Up Your Situation

Transportation Opportunity Costs

Screwdriver and WrenchSpending too much on transportation could mean sacrificing other things you want or need.The costs of transportation options include cash outlays for purchasing and insuring your vehicle as well as opportunity costs (the benefits you give up by choosing something else) associated with your choice.

Assessing Opportunity Costs

For example, let’s say you have an older car that needs new tires and a front-end alignment. You’re not sure if you should invest in fixing your current vehicle or if you should put this money toward a new car. The monetary cost of the repair includes parts and labor at the auto shop, but choosing to repair your older car also comes with opportunity costs such as:

  • The price of any work time missed to take your car to the shop.
  • Effort and time to find alternate transportation while the car is being fixed.
  • Incentives you might have received by trading your older car in for a newer vehicle rather than fixing your car.
  • Anxiety about spending money on a vehicle that might need to be replaced soon anyway.
  • Using funds from savings, or adding to debt if you charge the repairs on a credit card.

What Would You Do?


  • What would be the opportunity costs of choosing to buy a newer vehicle now rather than fixing your older car?

Buying now could mean that you have to act fast, sacrificing time to research potential vehicles, dealerships and discounts, and increasing the risk of a decision you might later regret. Buying a car also could require more money up front than just doing the repair. A newer car could mean adding a car payment that you didn’t have before, and possibly increasing your insurance premiums.

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