We all make mistakes, and sometimes small mistakes lead to bigger ones—especially when it comes to debt. It’s easy to get on a high horse and tell someone what they should or shouldn’t have done; coming up with solutions can be a lot harder, and this debt-saddled car owner needs a fix and not more judgment.

(Welcome to a Ask Automatch! Where you get to ask me your burning car buying questions. Got a scenario or a situation and you aren’t sure what to do? Send me an email at and I’ll try to help you out.)

This week’s letter comes from Tim, he has gotten himself into a bind with a combination of bad decisions and now needs away out. He had a truck he was using as a work vehicle, but traded it in for another truck, and now he’s locked into a much more expensive and longer car loan with a lot more negative equity.

Up until a few months ago, I had a new 2016 F-350 with snow equipment I used as a second income. The truck was great. My first mistake was selling it because I thought I didn’t want to do snow removal anymore. My second mistake was buying a new Toyota Tundra TRD pro, because I mistakenly believed it would be a bit cheaper and last longer.

I don’t have a problem with the vehicle itself, just the interest rate, term and everything financially related. It’s absolutely destroying my family budget and looking for a way to get out of it and get a smaller vehicle and get back on track financially.

Here’s my problem. I have huge negative equity thanks to interest and how the loan is structured. I’ve read one of Jalopnik articles that suggested getting a lease to absorb the negative equity, find a vehicle that has high incentives to reduce the hit and after 36 months, be able to start fresh.

It’s nearly impossible to find a lease (or dealer) that would even allow me to lease with the negative equity which works out to be about 15-16k dollars and even if the dealer manages to get it through, the monthly payment is just as high as my current truck at $900/mo.

My truck is an 85 month loan, at 8% interest, and yes, it’s a new vehicle with a high interest rate andI had 2-3k in negative equity rolled in from the previous truck.”

Wow, so the key takeaways here are $16,000 in negative equity, 8 percent APR, and an 85-month loan with payments at $900 a month. You’re in quite the pickle, Tim. But fear not—there is a way out of this, but it’s going to take some work and some discipline.

Before I get into what Tim should do, I’d like to take a moment to address a learning opportunity for anyone reading this.

First, if you have a vehicle that is treating you well and bringing in extra income. Do not get rid of that car especially if that car is brand new. That is a surefire way to put yourself in a negative equity situation and your net loss will be even greater because you no longer have the additional income.

Second, don’t be fooled into thinking that you can “afford” a car if the payments are stretched out over an 85-month term. A $900 payment at 8 percent interest means that your total loan cost will be $76,500… that’s a lot of money to spend on a Toyota truck! Always look at the big picture before jumping into something like this.

Tim is correct that However, that really only works when you are a couple of grand under water. Once you surpass $10,000, it’s a pretty different situation.

I desperately need a new car, the one that I have is becoming an unreliable money pit. The problem…

As Tim has experienced, dealers have a hard time getting lenders to approve loans and leases with that massive amount of negative equity rolled in. What he needs to do is find a way to pay down the principal so that he can trade or sell his truck without rolling all that extra balance into another car loan.

A lease may still be in the cards, but the strategy here is to divide and conquer. The first step is to get a personal loan for the $16,000 worth of negative equity, and then use that money toward the principal of the truck loan. If Tim has good credit and a healthy debt to income ratio, he can get and unsecured personal loan for as low as 10 percent APR.

By taking a five-year term he would have personal loan payments of $340 a month. That’s still a lot of money to pay for a car you don’t have, but it’s better than the alternative.

Tim’s second step is to get a cheap lease with no money down. I recently did a lease deal for a client on a brand new Honda Civic EX. You don’t have to be stuck with a base model! That car was just $250 month with zero out of pocket and all taxes and fees included. This would bring the combined payment to $590 a month.

I know what you are thinking... why would I pay almost $600 a month to drive a Civic? Because it’s better than paying $900 a month to drive a Tundra. If you’re disciplined you will wipe out the $16,000 personal loan in five years and by the time the lease on your second cheap car is done, you will be free.