I’m sure I’m not alone in the dilemma I currently face. I have a truck that I’m still paying for, yet it’s costing me almost as much as my payments in repairs.

Owing to a number of factors, this is much more of a problem than it used to be. I bought the truck when the Canada/U.S. dollars were even, so it has a reasonable monthly payment, especially considering a new truck is automatically at least 20% more expensive due to the current exchange rate, not to mention the annual increases with each model year change. However, with the cost of repairs on top of the payment, a new truck is looking better all
the time.

Now that’s not to say that the truck is unreliable. Things wear out over time; it’s why the manufacturers only offer warranty for a specific time and mileage period.

It’s how truck repair shops stay in business. But in times past, a truck was usually paid for by the time the repair bills started rolling in and it was just the cost of doing business.

Today, trucks are more complicated, and complicated means more expensive – both to buy and to repair. There’s a lot more stuff that needs replacing and cleaning as part of routine maintenance and there’s a lot more to go wrong, too.

Used truck prices reflect this. A four- or five-year-old truck with half a million miles is going to require around $10,000 per year in repairs over the next half million miles, so residuals have dropped. That’s how the free market works.

If you’re buying such a truck, the monthly payment and the repair bills will add up to less than the payment on a new truck, mainly because the monthly payment will be quite low if you buy it over three or four years. But add the repair bills to the higher payments you’ll be making if you’ve had the truck from new and still have a couple of years left to run before you pay it off, and the combination of payment and repair bills can be painful.

From my own personal experience, I see three ways to address this issue. One, you buy a new truck and trade it in every three years. It will still have decent drive tires, still be in warranty, and will have a reasonable residual value and desirability.

Two, you buy a three-year-old truck with a lower payment and expect the worst and hope for the best when it comes to future repair costs. Each method has merit. A new truck should be trouble-free for the time it’s in your possession, but the monthly payment will be high. A three-year-old truck will have a lower monthly payment and will require new tires early on and a few expensive maintenance items, like a diesel particulate filter cleaning for example. But, overall it should be a little bit cheaper each month – on paper at least.

The third option – and there are two ways to go about this – is you could buy a new truck and decide to keep it when the warranty expires because it’s been a good truck. The first way is to build in a residual when you buy it and pay for it over a shorter term. Let’s use $50,000 as an easy example.

You have the option of trading it for a new truck, maybe even making a few bucks out of the old one, or you can pay off the outstanding amount, either in cash or by refinancing it. The second way to do this is to buy it over five years and refinance the truck after three years and spread the remaining payments out over an extended time period.

However you look at it, buying a truck isn’t as simple as it used to be.