Should I trade in or keep my '07 Dodge Ram Pickup?

Question

I bought this truck for $30,000 just over a year ago. I still owe about $24,000 and the value is only about $19-$20,000 in the current economy considering gas prices. The truck has a Hemi and only get about 14 mpg in town and 17 mpg hwy. Herein lies my problem. I was just transferred at work and can no longer carpool with my wife. I will have to drive 40 miles each way to work. My question is... would I be better of trading in on a smaller vehicle that gets 30 mpg and rolling the $5k that I am upside down into the new note or just keeping the truck? Any thoughts or suggestions are appreciated.

Answer 1

I feel for you.  I traded in my wife's Dodge Ram for a Jeep Liberty.  I really didn't want to trade it in and have the difference tacked on to a new car note but with gas prices at $4.00 a gallon it seems like it was for the best.  Gas was still a little over $3.00 when we traded in the Dodge, I don't even want to know how much it would cost to fill it up now.  I really liked that truck but my wife was driving about 40 to 60 miles a day, basically she would have just been working to have money to gas up.  Now she works about 10 miles from home and gets better gas milage.  Hope this helps.

Answer 2

I'd say trade it in, unless you do a lot of hauling that you NEED the truck.  If you are carpooling, it seems like you don't use the truck as much, but your still making payments on it?

I'd trade it in for something fuel efficient that you like...there are tons of different style cars that get 30+mpg.  You can always get another truck, or a cheaper used one if the economy ever turns back around.

Answer 3

i would say keep the truck and find a older car cheep that will get good fuel as a work car and consider the gas saving to pay for it in a year i did that i hated the idea of getting rid of my truck and since its just a work car i didn't care what it looked like as long as it was good on gas

Answer 4

Any question that starts with "Am I better off", Do the math. Please, please please, don't listen to anybody that doesn't do the math.  If you want to be better off, do the math.

You omitted some details - change them to suit.  If you work 5 days a week, that's 40*5*2 = 400 miles, obviously, at about 15 mpg = 26.6667 gallons = $106 a week at $4 a gallon, just for work (does not include side trips to the store).

So, that's a lot.  You can cut that in half if you trade cars, which will save about $53 per week or $2756 a year.  If you eat $5000, and that's the only consideration, then you'll save enough at $212 a month to pay for that in a little less than 2 years.

However, there are other considerations, at least in my opinion.  The $5000 is already gone; you've already lost it.  You can't make decisions on sunk cost.  To evaluate properly, You really should be thinking of what comes in the future.

So - If you keep the truck, you'll have to pay the $25,000; all of it.  If you drive it, say, 10 years (gotta pick something) then you'll burn $106 * 52 weeks/year * 10 years = $54,000 worth of gas, at $4 a gallon.  Is it worth it?  Obviously there is a cheaper way.  How much extra would you pay to drive your truck, over something like a $10,000 Econobox? You have to decide that.

If you have NO MONEY (apparently, since you want to overfinance) then you ought to sell the truck outright and buy a Kia that gets 30 mpg and costs $10,000.  That would make you even more "better off".  If you buy an Audi S4 for $50,000, then you'll be "worse off".

Answer 5

Sell it ASAP.  Value is lower than you think. We are discounting a few last year models 10- 20k to move old inventory and price will not go up.

Longer you  wait more negative you will be.

Good Luck!

Answer 6

Rarely does it work out that spending money puts you in a situation that allows you to save money, even in the long run.  

In today's market a V8 Hemi Ram is dead meat.  If you could find a dealer interested enough to take this truck off your hands their offer would be seriously lower than any book value or website estimate. Especially if the car you want to buy is priced in the $18,000 range brand new.  

Take it in to Toyota dealer and find out.  Tell them you want to trade your Ram in on a Corolla and see what the Used Car Sales Manager offers you for the Dodge.

But to answer your question,  You're know you are going to lose at least $5k in the deal.   The difference in yearly gas expenses between a car that gets 14 mpg and one that gets 30 mpg is around $2100 a year (avg. 15k miles per year).  So it will take you 2.5 years just to break even and get your $5 grand back. .