Optimum time to trade in for another 4Runner?

[comp_engineer]

I've had a ton of fun with our 2013 4Runner Trail. Did the Mojave trail bone stock (even tires) and drove it cross country.
I'm amazed that KBB says the trade in value is still $29k, which is only 25% depreciation in 3 1/2 years.
When I bought it, I intended to keep it at least 10 years, after moving from CA to CT (where rust lives) keeping it for 10 years worries me more.
Doing the math on depreciation per year trading it in now vs keeping it for 10 years (assuming it's worth $12k trade after 10 years - similar to what a 2006 runner in good condition is worth) shows that yearly depreciation is similar keeping it for 4 years or 10 years.

So besides the one time tax/license fee - it doesn't seem to pay off financially to keep it for 10 years instead of 4 due to the excellent resale value.

Am I missing something? At first I thought it was crazy to buy such a reliable vehicle, only to trade it 4 years later...but maybe [MENTION=66316]1engineer[/MENTION] is right....

Thoughts?

 

[1engineer]

I've had a ton of fun with our 2013 4Runner Trail. Did the Mojave trail bone stock (even tires) and drove it cross country.
I'm amazed that KBB says the trade in value is still $29k, which is only 25% depreciation in 3 1/2 years.
When I bought it, I intended to keep it at least 10 years, after moving from CA to CT (where rust lives) keeping it for 10 years worries me more.
Doing the math on depreciation per year trading it in now vs keeping it for 10 years (assuming it's worth $12k trade after 10 years - similar to what a 2006 runner in good condition is worth) shows that yearly depreciation is similar keeping it for 4 years or 10 years.

So besides the one time tax/license fee - it doesn't seem to pay off financially to keep it for 10 years instead of 4 due to the excellent resale value.

Am I missing something? At first I thought it was crazy to buy such a reliable vehicle, only to trade it 4 years later...but maybe [MENTION=66316]1engineer[/MENTION] is right....

Thoughts?

Of course I'm right.... on what topic I have no idea...

 

[CO-Cygnus]

I've had a ton of fun with our 2013 4Runner Trail. Did the Mojave trail bone stock (even tires) and drove it cross country.
I'm amazed that KBB says the trade in value is still $29k, which is only 25% depreciation in 3 1/2 years.
When I bought it, I intended to keep it at least 10 years, after moving from CA to CT (where rust lives) keeping it for 10 years worries me more.
Doing the math on depreciation per year trading it in now vs keeping it for 10 years (assuming it's worth $12k trade after 10 years - similar to what a 2006 runner in good condition is worth) shows that yearly depreciation is similar keeping it for 4 years or 10 years.

So besides the one time tax/license fee - it doesn't seem to pay off financially to keep it for 10 years instead of 4 due to the excellent resale value.

Am I missing something? At first I thought it was crazy to buy such a reliable vehicle, only to trade it 4 years later...but maybe [MENTION=66316]1engineer[/MENTION] is right....

Thoughts?

It all really depends on your financial situation, how much equity you have in the 4R (Trade In vs Owed) and how much you want a new truck. You'll probably find that your equity situation does not change drastically, because as the truck depreciates you are also paying it off month by month.

Personally, although I wanted to get a new 5th gen when the mid-cycle refresh hit I have been holding off until we have official word on the 6th gen.

 

[comp_engineer]

Of course I'm right.... on what topic I have no idea...

right on trading in a reliable vehicle every couple years due to the uncommonly high resale.

 

[1engineer]

right on trading in a reliable vehicle every couple years due to the uncommonly high resale.

I know lol I was just messing around.

 

[Blitzkrieg]

I'm not an engineer but I am a computer geek and here is my take:

I bought my 2015 Trail with basically free financing from Toyota.

I paid it off in full 9 months later.

In Denver's market I could sell it today for damn near what I paid for it (4Runners have insane resale value here and Trails are particularly hard to find).

Will I? Nope. Why should I? I love it and it's only got 7K miles on it. I will be in diapers long before this thing will.

That being said - you live in an area that is notorious for eating body metal. Yes. If I lived there I would upgrade every 4 years while the vehicle still has value and is not a rolling rust bucket.

What say ye 1Engineer?

 

[e60ral]

I don't understand paying off a vehicle in 9 months when its so easy to get financing <2% and yours was "basically free"


To OP- depreciation won't be perfectly linear, the rate of depreciation will drop some and level out as the vehicle gets older. buying more frequently just means spending more time in the steeper part of that curve. The 4Runner is one of the best vehicles at depreciation, so that difference isn't nearly as sever as most other vehicles but that trend will still be there. If you don't mind paying that little bit and want a new vehicle go for it, although if you're talking about buying an upcoming 2017 i feel like waiting another year for the next gen might be worthwhile.

i think the main thing you are missing in your analysis the cost of financing and if there is a value to you in time without a car payment

 

[comp_engineer]

Rust on body and KDSS system components is what makes me weary of keeping it forever.
If I could do it all over I'd get an SR5 with 3rd row seats. The off road goodies on the trail have not been used as much as a 3rd row would have been...especially as the kids get older and we transport their friends.
Who knows, maybe I'll go to the dealer and they'll offer much less than KBB and it will be a harder decision.

 

[Dalko43]

My advice, in no particular order:

1) Rust is inevitable in any northeastern state, but how will getting a newer 4runner solve that problem? It will rust just as much as your CA one will, which I'm guessing has little to no rust due to CA's climate.

2) Rust can be mitigated: spraying off the underside every so often; applying fluid film to inhibit rust; scraping off, priming and painting the underside for long-term protection. 4runner bodies and frames will easily last 15 years in northern winters with just basic cleaning and maintenance; they can last much longer if you take the precautions listed above. The only Toyota I can recall having issues with rust were certain model years of the Tacoma having frame rust issues, but that seemed to be a defect from the factory which Toyota acknowledged, for the most part.

3) I'm not sure what your financial situation is with this 4runner. Is it leased? Is there a payment plan? Do you still owe money? Generally speaking, trading in an older vehicle and buying a newer one will cost you more money in the long run. Also keep in mind that new vehicles will depreciate a bit faster in the northeast because the climate is harsher on the vehicles. So if you buy new and plan to drive in CT, I would expect a higher rate of deprecation vs. what you experienced with your CA 4runner.

Honestly, if rust is the only reason motivating your desire to sell, I'd say you're better off keeping the 4runner you have and maintaining/prepping it for northeastern winters. There are plenty of vehicles that live long lives up here...the reason you see so many rust buckets on the road is because most car-owners don't give a crap about vehicle care and maintenance.

 

[ToyoDriver]

I don't understand paying off a vehicle in 9 months when its so easy to get financing <2% and yours was "basically free"

I paid mine off in three weeks.

Even 1.5% on $35,000 is $1,300 in interest over 5 years and who likes paying interest?

Plus, now it's "mine". I "own" it. I enjoy knowing that.

I have already considered trading mine in for a TRD, but I like having 3 rows of seats and with only 1,500 miles on it I'd probably eat $5000 at least

 

[e60ral]

but you can beat 1.5% doing almost anything else with the money, hell you could beat 1.5% with a CD with no risk.

Even savings accounts can be 1%, so you could just let that money sit in a high yield savings account and it would be available to you in an emergency and cost you almost nothing

 

[1engineer]

I'm not an engineer but I am a computer geek and here is my take:

I bought my 2015 Trail with basically free financing from Toyota.

I paid it off in full 9 months later.

In Denver's market I could sell it today for damn near what I paid for it (4Runners have insane resale value here and Trails are particularly hard to find).

Will I? Nope. Why should I? I love it and it's only got 7K miles on it. I will be in diapers long before this thing will.

That being said - you live in an area that is notorious for eating body metal. Yes. If I lived there I would upgrade every 4 years while the vehicle still has value and is not a rolling rust bucket.

What say ye 1Engineer?

Personally? Buying a vehicle like the 4Runner is never a need, just a want. Justification for buying a vehicle like this (or keeping a vehicle like this) is tenuous at best. It all boils down to what you want and what you can afford. If you want one, buy it. If you can afford to trade (or you get bored, or you just like change) every two to four years then this is one of the best vehicles to do so with because of the high residual value.

These vehicles won't rust in four years, even in high corrosive environments like the northeast. I see many 4th gens running around here (lots of salted roads in winter) and they still look good and are sound underneath.

Bottom line, if you can afford to trade often, the 4Runner is a vehicle that will cause you to lose the least money lol.

 

[Engineer]

I don't understand paying off a vehicle in 9 months when its so easy to get financing <2% and yours was "basically free"

Everyone's feeling on this is different and even monetary matters are not a purely mathematical activity. It took me more than 9m but I did similar and paid it off very quickly. Could that money have been invested in a low cost index fund like my retirement accounts, yes, and it would have made more money then I saved on interest for the loan but I sleep better not having that car payment.

Also the sad reality is had I not paid extra based on checking account balance I would have just spent it on something frivolous, it wouldn't have been saved and invested so any comparison or statements that it would have been (for me personally) isn't worth arguing and it was the right choice financially and mentally for me to pay off the loan quicker.

To the OP, financially Its rarely truly saving money to trade a vehicle in, even one with high resale value. However as mentioned above, sometimes the timing can be right to minimize costs in the long run which it seems you are trying to do.

 

[SirBarton]

.

Bottom line, if you can afford to trade often, the 4Runner is a vehicle that will cause you to lose the least money lol.

That's it right there.

Constantly trading cars is always a good way to waste money, but I hear so many people trying to justify a "better deal". Maybe it's the idea that a monthly payment is all that matters...

I bought my 4Runner in cash because to me, paying any interest is a waste of my money. I can't always do that, but when I can, I will. It's also why I will pay off a house as fast as possible and never carry credit card balances.

If you can "afford" to trade often, why not go for Land Rovers, BMW, Lexus, - luxury brands? Those are the cars that you want to trade in before the expensive repairs kick in.

 

[nb rob]

for what it's worth,

I'm in a rusty, salty, corrosive area....

Every year I do a bit of work under the truck cleaning up with surface rust, applying fluid film, and POR15 where required. I've managed to keep 10-year-old vehicles very tidy this way.

The underside of my vehicles is jet black and clean. Cleaner than the new GMC trucks at a local dealership.


I work in structural steel, and bare steel left uncoated rusts incredibly fast. It is not structurally deficient - just ferric oxide on the surface. Step one of every fabricated member involves abrasion or media blasting to clean off the surface oxidation layer.

It takes a long time and a blind eye to allow rust to become a serious problem. Keep on top of it, and you'll have no worries.

 

[comp_engineer]

When we decided to move east last year I was worried both our cars would turn to dust - so spend a while coating the undersides with rust inhibitors.
I do see many 3rd gen's that look brand new, and others with fenders rusted through so clearly it is maintenance/usage dependent.

I'm sufficiently talked into putting off a trade in decision for a couple more years.

 

[ToyoDriver]

I sleep better not having that car payment.

Also the sad reality is had I not paid extra based on checking account balance I would have just spent it on something frivolous, it wouldn't have been saved and invested

That is the sad reality.

I could spend $35k paying off my T4R, or I could "invest" $10k and then spend $25k turning my T4R into a super monster lifted behemoth and going to lots of Dolphins games all the while having a $600/mo commitment and nothing of value to show for that $25k in a few years.

 

[NuclearN8]

I am struggling with this same decision...

here's my thing.. If I get a new 4Runner (or you do) I'd recommend fluid filming the crap out of the undercarriage and applying anti-seize to any undercarriage fastener you intend to one day remove (skid plate bolts, sway bar bushing bracket bolts etc...).. if you're not willing to do this on a brand new vehicle you may as well keep your existing vehicle or you'll eventually have the same feeling 3-4 years from now, the only difference is you'll be out 12-18K... (the difference of the trade OTD price)

The conclusion I've come to is keeping a vehicle for 10-15 years takes committment from the day you bring it home in the rust belt. If you're not ready to make that committment, keep what ya got or be prepared to blow thru 12-15K every 3-4 years on trade-in loss.

Lastly, keeping the vehicle you have 99% of the time is more cost effective than buying a new one, even with the 4Runner's exceptional resale/trade-in value... if the vehicle is paid off, it's only costing gas, insurance, and maintenance items (all things that also exist with a new vehicle, the new vehicle also comes with the payment (+interest) or upfront payoff which are still money spent)

Personally I try to keep vehicles for twice the term of any loan I've paid on it. This helps me mentally justify the interest paid to lower the overall cost of ownership of the vehicle...and makes me feel like I got a good value (driving a reliable and capable vehicle with no payment is a nice financial freedom to have, if you desire that sort of thing)

 

[Muzzle of Bees]

I wont ever invest in any market ever again. Its a scam and I would rather have my eyes gauged out. Pay off your home and you can live extremely well and buying a new vehicle wont seem so stressful.

 

[Blitzkrieg]

I don't understand paying off a vehicle in 9 months when its so easy to get financing <2% and yours was "basically free"

There is a reason but I'm going to get into it here. Let's just leave it at I was able to, needed to and did. ;-)