Just picked up a 89 F250 with a 5.8 and automatic and it was a little sluggish so I looked up the axle code and it has 3.55 gears,I have a frame that has a 4.10 axle with limited slip that I could put in but would it make much of a difference. I do know the fan clutch is stuck to full on that will drain some power but with 3.55 gears and tall 265-75 16 tires might be a little too much for those gears.

 

Swapping in a 4.10 axle will give you a little better acceleration, but you will be giving up some fuel economy.

 

Try fixing the engine before you downgrade the truck. If you just lower the gear ratio, but continue to neglect the engine, you'll just have to change to an even-lower ratio later. The truck ran well when it was new - it CAN again. This one would barely run a few seconds when I bought it, but it's tip-top now.

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