Repair tipping point: Why I traded in my truck

toy car on top of a calculator

A year ago, I wrote about how I was going to drive my truck forever.

This summer, I caved and bought a new one.

Life can change and so can financial equations.

With a growing family and increasing vehicle maintenance and repair bills, getting a new vehicle was the best long-term financial decision.

I was driving a 2003 Nissan Frontier Crew Cab with 110,000 miles, which I bought new in 2004.

Aside from tires, batteries, oil changes and routine maintenance, the first 100,000 miles were relatively easy.

But in the past 16 months, I spent almost $2,000 on a new timing belt, new water pumps, belts, radiator and some serious AC work.

I was likely going to need a new set of tires in the next year and a front and rear brake job. Another $1,000.

A new clutch was probably on the horizon, too.

The truck was still very reliable, but all aging vehicles require more maintenance.

The way I saw it, every dollar I spent was money coming out of the down payment on a new vehicle.

Going years without an auto loan allowed me to sock away money in an account specifically for vehicle maintenance or a down payment.

But that account was being drained. Two years ago my vehicle account had $7,000 — it was now down to $5,000.

It no longer made financial sense to keep improving a depreciating asset that I was going to replace in a couple of years anyway. (Here's the rule of thumb on when you should replace your old car or truck.)

So I decided to make the leap.

Thinking I could sell the truck myself for much more than I could get via trade-in, I tried that route first.

I listed it at Autotrader.com and Craigslist.

Meanwhile, I had been doing some test-drives and preliminary shopping.

My target vehicle was a 2012 Nissan Pathfinder with less than 30,000 miles on the odometer.

I eventually found a Pathfinder with only 13,000 miles on it. The vehicle history report was clean, and as an official Nissan Certified vehicle, it came with a 7-year/100,000-mile limited warranty.

Even without negotiations, the asking price of $23,800 was already reasonable. It was a practically new truck at a used price.

This was the one, by far the best of 15 other vehicles in the area that met my criteria.

How much car can you afford?

How much car can you afford? Americans spend more than $30,000 on average when they purchase a new car and light truck. But our study found that the median-income family in 24 of the nation's 25 largest cities can't afford to spend that much on a vehicle. "What this research indicates, more than anything, is that a lot of Americans are spending too much money on their cars," says Mike Sante, managing editor of Interest.com.

My truck had only been on the market for three days, but I figured it was worth approaching the dealer to see what it would pay for a trade-in.

So I grabbed my checkbook and went ready to make a deal if, and only if, everything was right.

As expected, the dealer started with a $5,900 lowball offer.

After a half hour of back and forth, we got it to $6,600.

I was fairly happy with that number, so then we started haggling on price. An hour later we had the $23,800 down to $23,000.

That was about on par with the Kelley Blue Book value, Edmunds value and more than $2,000 below the National Automobile Dealers Association value.

Then I got the dealership to throw in a $125 cargo mat for the rear.

While I had my own financing in place at 2.7%, the dealership offered me a rate of 1.5% if I purchased the $500 prepaid maintenance plan.

It would essentially cost me nothing since they used the interest rate spread to buy the plan.

The finance manager likely got a commission out of it, and I got free oil changes and tire rotations for three years.

We made a deal.

I put down $5,000 cash, got $6,600 for my truck and financed the rest.

I bought well under the 20/4/10 rule and ended up with a monthly payment of $242.

The way I see it, my purchase will provide us with a comfortable, reliable family vehicle for the next 10 to 12 years.

The monthly payment I'm taking on isn't much more than I might pay for repairs and maintenance on my old truck.

I'll hopefully pay off the loan in 3½ years and will start saving for my next vehicle purchase, sometime around the year 2025.

  • Thomas Staab

    The expectation of continuous spending on a vehicle at that rate is relative to the individuals personal finance situation. There are no standards except the government allows .58 cents per mile reimbursements. But I like to think of a vehicle investment in terms of "miles per dollar" (mpd). In other words how many dollars does it cost to drive that vehicle 1 mile down the road. If it doubles in a year with more expectation to spend then it becomes and opportunity cost consideration relative to your personal financial situation.