Truck debt too much.

[bruce101]

So I paid off all my debt except for my truck. The truck is worth 31k and I owe 33k. Ive been making big payments on it to get it down but a 30k truck for my wage seems way over my head. I was thinking of just getting a 10k truck and pay it off within a year and be done with it. The wife doesn't want me to sell the truck but the big number of 33k is killing me. Any advise?

[dczech09]

What is your income? Household income?
What is the monthly payment on the car loan?
Interest rate? Length of loan?

Here are some rules of thumb with regards to car loans...

The total value of all cars should never exceed 50% of your total household income. You do not want to much money tied up in things that go down in value.

You should be able to pay off your car loan within 2 years. If you cannot be debt-free on your truck within 2 years, sell the truck!

You could sell the truck for however much it will bring in, then cover the different on the car loan with cash if possible. If not possible, take out a small loan to cover that difference. So for example, if you sell your car for $31,000 and your car loan is $33,000, then you would take out a small loan for $2,000 to cover the difference.

What is your wife's reasoning for wanting to keep the truck and the loan? Why is she against you getting a less expensive alternative? That would be a very wise decision for the entire household in general (including her).

Let's be real for a second: about the only people who can afford a new auto on a loan is people with millions of dollars. The opportunity cost of your car loan is ENORMOUS!

[disneysteve]

So I paid off all my debt except for my truck. The truck is worth 31k and I owe 33k. Ive been making big payments on it to get it down but a 30k truck for my wage seems way over my head. I was thinking of just getting a 10k truck and pay it off within a year and be done with it. The wife doesn't want me to sell the truck but the big number of 33k is killing me. Any advise?

How much do you earn? What's your monthly take home? How much is the truck payment and how many payments remain?

[bruce101]

I make 3600 a month. minimum payment is 510 but I pay 800. She doesn't want me buying a hunk of junk but at this time I could care less.

[disneysteve]

I make 3600 a month. minimum payment is 510

You are correct. You can't afford the truck.

Your car payment shouldn't exceed 10% of your monthly income for no more than 36 months. You are way beyond those guidelines.

Pay $800/month for 3 more months. That will get you even on value vs. loan balance. Then sell it. Then buy a "new" vehicle that meets the 10%/36 month guidelines.

[bruce101]

its nerve racking. I don't even know what the dealership would give me for it. We love the truck and want to keep it but it keeps me up at night thinking of how much it costs. I could keep making the payments but will take years to pay off.

[disneysteve]

The truck is worth 31k

I don't even know what the dealership would give me for it.

You said the truck is worth 31K.

How much a dealership would give you is irrelevant. You aren't trading it in. You're selling it.

[bruce101]

I was saying if I were to trade it in on a cheap 10k truck. But then I was thinking if I spend 10k on a truck and lets say I had 2k negative that puts me at 12k. Instead I put that 12k on my current truck. Refinance so the payments drop and then I have a good truck that will last me 10+ years. Its a toyota tacoma and I know they will last.

I'm only thinking about this because if I buy a 10k truck Most all of them are over a 100 thousand miles. So after its paid off it might not last that long maybe 3-4 years. Plus trucks at this price are usually not double cabs and we need a back seat for when we have kids.

Thoughts?

[Fishindude77]

My advice. Sell the truck and do best you can. If you owe a balance after that (which you most likely will), take a note with the bank and pay it off quick as you can.

Forget the $10K truck, you don't need that either. Find yourself a $2K or less car / truck and make that do until you get the note paid off.

After that, save your money and pay cash for your next vehicle. There are many decent vehicles available for under $5K. Might not be exactly what you want, and may hurt your ego a little bit at first, but there is no shame in driving an older used vehicle. Take comfort in the fact that yours will be paid for while your friends driving the fancy new rigs will likely never own theirs.

So you have to do some maintenance or repair? Big deal, you can do some of that for what you have saved on payments, interest and insurance and still come out way ahead.

Another note. We guys like our trucks, but they are much more expensive than cars, plus generally drink more gas. You can't get much of a truck for $5K, but will have lots of decent cars to choose from.

[bruce101]

All great advise. I need a truck. We already have a paid off car that's my wife's. With our budget I can do the 800 a month for a year and get a decent paid off truck. We already have a emergency savings too. I guess I'll see how much I can get for my current truck.

[Fishindude77]

Just another comment.
I'm a truck guy too, always have had one and probably always will, but if I was being perfectly honest with myself I don't truly NEED a truck. 90% Of the time I'm driving around with an empty bed or very little in the back.

Not going to change my ways, as I pay cash for vehicles and can afford it, but truth is I could drive a car every day and rent or borrow a truck on those occasions when I need to haul something too big to fit in a hatchback or trunk. Would save myself a ton of money by going that route.

A lot of these "needs" that get us in financial trouble are only perceived.

[autoxer]

If you aren't using the truck to actually make money, then you probably don't 'need' a truck. Think about how often you are using the trucks real capabilities. If you are moving other peoples stuff more than you are moving you own stuff, then you probably don't need a truck. I know it can be tough to let go, I had a couple trucks, but the vehicle isn't your identity. You can rent a truck for $20 at Home Depot for the times that you really need to haul something, and then you don't have to worry about scratching the paint on your fancy truck.

Although not very exciting, I've realized that a compact wagon meets 99% of my needs. It fits two child seats, has roof rails that I have strapped furniture to, seats fold down to fit larger things, like 2x4's & a half sheet of plywood and it gets twice the gas mileage of a pick up truck.

[JoeP]

If your job doesn't require a truck, I would consider a used car. If you have the occasional need to haul or tow, an SUV might work with a trailer. And don't trade it in at a dealer, sell it on craigslist. Also, your mechanic might know someone who is looking for a truck.

[bruce101]

I use my truck almost daily. Finding Someone who will pay 31k for a truck might be hard. I'll throw it on craigslist today.

[Fishindude77]

What do you use your truck for daily?