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Dump It or Keep It?

I owe about $6,500 on my '02 Ford Ranger, which has a KBB value of around $3,500. The Ranger needs transmission work that’ll cost in the range of $2,500. Should I unload the Ranger, or go the repair route? The truck has 115,000 miles on it.

The problem is that it’s not really worth $3500 with a bad transmission, so you have little choice but fixing it or taking an even bigger loss. I would fix it and pay it off ASAP before the next major repair.

You really have to fix it. The good news is, once you’ve fixed it you’ve got a working vehicle and you just have to ride out the loan until it’s paid off. Try not to get upside down on a loan like that again. The only things worth going into debt over, in my opinion, are education and real estate (and with real estate you need to be careful). Now, I’m not perfect and I’ve had loans for things I’ve wanted and we all do, but try to keep that to a minimum.

Fix it, it is a good vehicle. You should look at your driving and maintenance habits because that it very early for the transmission to be bad.

You should consider the cost of a competent, not cheapest, tranny overhaul to Ranger condition. If you have done little or no maintenace sell for a price with discolsure. Cheating isn’t acceptable. If the truck has been well maintained, the tranny overhaul may be a better alternative. Can you find a Ranger or similar that you can pay cash for that’s better than the tranny overhaul cost plus reduced sales value?

After you fix it, the truck will be worth $3500. I’d fix it and drive it for another 100,000 miles or more. Pay it off and then put the car payment into a government bond money market fund for your next purchase. Once you replace the transmission, it’s one very expensive thing that you should not have to worry about again.