Ask Bark: Breaking The Cycle Of Negative Equity

Mark "Bark M." Baruth
by Mark "Bark M." Baruth

When I was in high school, many moons ago, I had to recreate an historical debate in front of the class as part of a project for my American History class. I was assigned to take a “pro” position on the Three-Fifths Compromise (I don’t imagine that these sorts of things happen much in high school today). My opponent in the debate was a young lady who was, shall we say, a little different. She didn’t have many friends, she was socially awkward, and I’m not entirely sure that I’d ever actually heard her speak before.

We picked numbers out of a hat to see which one of us would go first, and she won. Right from the beginning, it was evident that things weren’t going to go well. She starting mumbling, inaudibly repeating the same thing over and over. Our teacher, a kind, and gentle man, asked her to speak just a little bit louder.

“Three fourths of a person, that’s all they were. Three fourths of a person!” And then she broke into hysterics and ran out of the room. The teacher sprinted out the door after her, returning after a few moments.

“Now, everybody,” he began, “Mary (not her real name) is our friend. When she comes back in the room, I ask each of you to treat her as our friend.” Let’s be honest. She wasn’t our friend. But in that moment, thanks to a kind word from our teacher, we did our best to treat her as one.

Here at Ask Bark, we get a lot of emails. As the curator of said emails, I do my best to answer all of them personally, even if I can’t dedicate precious ones and zeroes to them in this space. Some of them just aren’t interesting enough for me to dedicate an entire column to answering — it’s often as simple as “Don’t go to that dealer if they’re pulling that garbage on you,” or, “No, it’s never a good idea to spend all of your money on a used German car that’s out of warranty.” Stuff like that.

But every so often, I get an email that both excites and terrifies me, because I know that there is sufficient content within for a good column, but will also likely expose the writer of the correspondence to the combined vitriol of TTAC’s Best & Brightest. Today is such a day. So, everybody, Tom is our friend. After you’ve read his email, I ask each of you to treat him as our friend.

Here we go.


I buy a new car about every 3 years. I typically drive about 35,000 miles a year so in the course of three years I spend the equivalent amount of seat time as the average 12,000-mile-per-year driver does in 8 years. While I take good care of my cars, do all the routine maintenance myself, and understand that modern, well-cared-for cars can easily log a bunch more miles, by the time I hit 100,000 miles I’m tired of the car and itching to trade. The rub is that I’m usually upside down so I end up adding cost to the new car note which starts this cycle over.

I know I’m creating this problem for myself, but I like new cars and I take comfort in the knowledge that a new car will likely remain trouble-free for the duration of my ownership. I also understand that new cars have warranties so if something goes drastically wrong, the manufacturer has my back — at least up to the mileage limit.

I’ve thought about options: A low-mileage off-lease car cuts depreciation expense, but how well the car was maintained or driven is unknown — and then I’m still left with a high-mileage car in just 2 years. A cheaper, small car is more affordable but comfort is important to me. Leasing a car isn’t an option because of the miles driven. There is no effective public transportation where I live so I can’t ride the bus.

Is there a better way or time to trade and buy that will at least minimize the negative financial impact and still enable me to indulge my “New Car Jones”?



Tom, I thank you for your letter. Now, as your friend, I’m going to give you the best possible advice I can, even if the mathematics behind your question are giving me a bit of a twitch in my left eye.

The good news is that you’re aware that you’re creating a problem for yourself — that’s part of any good twelve-step program. I am almost afraid to ask how many times you’ve created said problem, and how much negative equity you have in your current car. That is the sort of thing that can make breaking the cycle difficult — like taking out a payday loan. It’s difficult to get out of a loan with that much negative equity without rolling it into another sizable asset — like a new car, for example.

The bad news is that you’re engaging in quite a bit of poor-decision rationalization. You mention liking having a warranty — well, with your annual mileage, you’re not going to have a warranty on most of the cars sold in the USA after 12-18 months. You say that you understand that well-maintained cars will last quite a bit longer than 100k miles, but then you say you tire of the cars and just want something new.

You mention that you don’t know how a used car has been driven or maintained, but surely you’re aware of things like Autocheck and CarFax (flawed as they may be). You say that a cheaper, small car isn’t an option because you like comfort, but you have to know that there are small cars that are quite comfortable to drive, not to mention the money you’d save on fuel.

Leasing is the best way to go

But the greatest fallacy that you’ve accepted is that leasing isn’t an option. Tom, my friend, mi amigo, leasing is perhaps the best option. While they are never advertised, or even widely spoken about, high-mileage leases are fairly common and are specifically designed for people just like you — people who drive a high number of miles and quickly tire of cars.

No, you won’t be able to do a 30,000 mile per year lease on a BMW 3 Series for $299 a month, but when you pay for the miles in advance, you pay significantly less than you would if you had to do it as an overage penalty at the end of a normal lease. You even have the opportunity to negotiate your lease terms, so you might end up paying as little as six to eight cents extra per mile, which will be a lot less than the depreciation of your car in real world dollars after three years. And if you really want the reassurance of a warranty over the course of the lease, then just buy an extended warranty.

And after three years and 100,000 miles, you can simply walk away. No negative equity. No headaches. Nada.

The difficult part of all this is going to be biting the bullet the first time you break the cycle. You can either drive your current car into the ground for another 100k or so and wipe out all of your negative equity, or you can…shudder…roll negative equity into a lease. I strongly recommend against doing this. Doesn’t mean you can’t. But I really wouldn’t.

So there you have it, Tom. Go investigate high mileage leases, and then decide if you really want to break this habit, or if you want to keep justifying your expensive behavior. Tough love from your friend, Bark.

Go easy on him, guys.

Do you need your own dose of tough love? Send your questions to Bark at or slide into his Instagram DMs at @barkmfors and we promise he’ll be gentle.

Mark "Bark M." Baruth
Mark "Bark M." Baruth

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  • -Nate -Nate on Jul 22, 2019

    As usual there's an amazing amount of good help and information here, only good if those who read it (quite apart from Tom, the O.P.'s situation) as many here desire to have decent _enjoyable_ transportation at reasonable cost . Many ways to do this regardless of income level . -Nate

  • Dahammer Dahammer on Jul 22, 2019

    I don’t agree with the notion of buying more than one car, you can only drive one at a time anyway. Unfortunately, the OP wants someone to wave a magic wand and make the accumulated negative equity and high auto loan disappear. Sorry Sunshine, life don’t work that way. You need to balance your wants with your needs. You want a new car, but need transportation. Deep down you knew the right answer before you wrote to Barth, you just needed to hear it from someone else. Time to cut the crap and play the game, buy a used car with low miles and pay it off. Then keep driving it. No reason you couldn’t get 200k miles from a Camry or Accord. You are in this situation because you used your dinner money for breakfast.

  • DS No for 2 reasons. 1-Every new car pipelines data back to the manufacturer; I don't like it with domestic, Japanese and Euro companies and won't put up with it going to Chinese companies that are part financed by their government. 2-People have already mentioned Vinfast, but there's also the case of Hyundai. Their cars were absolutely miserable for years before they learned enough about the US market
  • Theflyersfan Well, if you're on a Samsung phone, (noticing all of the shipping boxes are half Vietnamese), you're using a Vietnam-built phone. Apple? Most of ours in the warehouse say China, but they are trying to spread out to other countries because putting all eggs in the Chinese basket right now is not wise. I'm asking Apple users here (the point of above) - if you're OK using an expensive iPhone, where is your Made in China line in the sand? Can't stress this enough - not being confrontational. I am curious, that's all. Is it because Apple is California-based that manufacturing location doesn't matter, vs a company in a Beijing skyscraper? We have all weekend to hopefully have a civil discussion about how much is too much when it comes to supporting companies being HQ-ed in adversarial countries. I, for one, can't pull the trigger on a Chinese car. All kinds of reasons - political, human rights, war mongering and land grabbing - my morality is ruling my decisions with them.
  • Jbltg Ford AND VAG. What could possibly go wrong?
  • Leonard Ostrander We own a 2017 Buick Envision built in China. It has been very reliable and meets our needs perfectly. Of course Henry Ford was a fervent anti-semite and staunch nazi sympathizer so that rules out Ford products.
  • Ravenuer I would not.