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What's The Best Way To Downsize Payments On Multiple Cars?

Illustration for article titled Whats The Best Way To Downsize Payments On Multiple Cars?
Photo: Jeep

As Jalopnik’s resident car-buying expert and professional car shopper, I get emails. Lots of emails. I’ve decided to pick a few questions and try to help out. This week we are discussing downsizing payments on multiple cars and buying new cars instead of used while there’s an inflated market for pre-owned vehicles.

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First up, if you have several cars and too much loan debt, what is the best way to manage it?

“I have a 2020 Gladiator that I lease. I have 24 payments left at $650 a month (rolled in equity from trading another lease in too soon). I also have a 2015 Miata – 3 years left at 4.75% - $452 a month - $13500 owed. We just bought a new house and our mortgage payment is significantly higher than it was. I can afford everything, but will have very little left over in reserve. I also just recently bought a 1996 Honda Civic for $1000 that is in great condition and would be a perfect daily driver. We have 3 kids so my wife uses the Gladiator and the Miata is now just used as a 2nd car. Would it make sense to trade in both vehicles and get a 5-6 year loan on a purchase of a newer vehicle, consolidating all of the negative equity into 1 payment? I have been looking at a 2018 Chevy Equinox Turbo Diesel with 15k original miles for $25,000.

What are your thoughts?” 

OK, so this looks like a complex situation, but it has a fairly straightforward solution. First, getting out of the Gladiator early is going to be prohibitively expensive, especially since you rolled in negative equity. You have a cheap Honda that works as your daily and a Miata that is a secondary car with a payment. If you are trying to cut down your overall cost, toss the Miata, keep the Jeep and the Honda, but do not buy another car. This would essentially chop your $1,100 total payment down to just the $650. Once your Jeep lease is up, you should have broken the cycle of negative equity, and you can reexamine your needs.

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Next, with used truck prices being really high, is it better to buy new?

“I was deployed to Florida for six months to support the launch, and my rental was a gorgeous 2019 RAM 2500 Bighorn. Easy to drive, better fuel economy than my ‘04 V8 explorer, and it towed at 24-foot pontoon boat like a dream. I’m leaning toward a 2019+ RAM 2500 Power Wagon Level 2. My struggle is new vs. used.

I’m headed toward the Midwest in two weeks to visit family, and vehicles are much cheaper there than in California. I can find new 2020 trucks in the Midwest at ~$57k (optioned at level 2) or used 2019 with ~20k miles for ~$50k. That’s only 12% depreciation for 1 year of use/abuse. When I picked up my Mustang in 2014 I had a much better ~30% depreciation for a 2012 with 39k miles. At this time I think I’m leaning towards a new truck? What do you think?”

In a case like this where the delta between new and used is that close, perhaps it’s best to buy new. While $7,000 in savings is not to be ignored, you are correct that the relative percentage difference between the new and the used trucks doesn’t add up to a great value in the pre-owned sphere. Now it only makes sense to buy that new truck at $57 if that advertised number is a legit sale price and not a teaser number to get you in the door. Often dealers will stack discounts that you don’t qualify for, and the “real” price is much higher.

Got a car buying conundrum that you need some assistance with? Email me at tom.mcparland@jalopnik.com!

Tom is a contributing writer for Jalopnik and runs AutomatchConsulting.com. He saves people money and takes the hassle out of buying or leasing a car. (Facebook.com/AutomatchConsulting)

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DISCUSSION

Blockheads

Holy fuck Mr. Gladiator-Guy. Who the hell thought $650 a month for a lease was a good deal? And how the hell are you still paying $452 a month with three years left on a five year old Miata.

Just stop digging dude.