What to do...dump the Runner or not?

[scott78945]

Ok, I know "not another one of these threads" but I am totally confused on what to do. I'll make this as brief as possible. I came to you guys as I know you won't BS me and give me your honest opinions.

I have an 05 V8 Runner SE with 30K miles on it. I have purchased the extended warranty from Shawn as well. I still owe $10K on it and now have enough in my account to pay off the Runner and own in outright. A tank of gas gets me about a week and a half these days to and from work and general travel around town. Ok, here is my problem...

Do I...

A) Pay off my Runner and just suck up the cost of gas and go easy on the lead foot as I will not have any further car payments

or

B) Trade my Runner in and get $6-$7K of equity out of it, if I am lucky, and put that down on a new 09 Camry along with my $10K down. This will leave me a balance of about $3-4K on the Camry to pay off.

My gut tells me to keep my Runner as I do LOVE the vehicle but I also like the Camry's as well since I drove one as a loaner when they were fixing my Runner one time. Any suggestions? I am also looking to buy a house so I want the car payment gone so I have that extra towards a mortgage. I think I should probably run the Runner into the ground, or close to it, and then move onto a car at that time.

 

[josh220]

Ew, keep the 4runner. The extra $$ on gas won't be more than payments on a new vehicle. Besides, 4Runners have balls, you don't want a Camry....

 

[alaskaman]

when you think of driving a Camry and saving 8 miles to the gallon how do you feel>?

 

[scott78945]

when you think of driving a Camry and saving 8 miles to the gallon how do you feel>?

Not so hot but the Camry gets up to 31 mpg on highway and I'm getting 17 mpg on my V8 now. I still think its worth it as I don't drive all that much. I guess I have already made my decision and it would be more of an issue if I had a longer commute. However, our office is moving and it will be more city driving than highway. Maybe I'll wait until I see what my new commute is and how much gas I'm sucking up.

 

[alaskaman]

If you don't need the V8 you could probably figure out a way to get a V6 and not be any the worse $ wise for it at this point in time. just my opinion. and yah it hurts when I fill up near $100. for a tank but I am so far willing to do it to keep the car that I like..........

 

[Dblues28]

Hey Scott...

One thing I've learned over the last few years of trading vehicles...

In 2005 I purchased a 4Runner V-8 Sport Edition 4x4...in 2007 I traded it for a 2007 Tahoe LTZ with all the trimmings. I thought I had legit excuses to trade the Runner in on the Tahoe, but in the end???....last month, I traded the Tahoe for a new 2008 4Runner V-8 Sport Edition 4X4 just like my 05. I loved that 05 and should have never traded in the 1st place...I made excuses for needing more room etc, etc...

I understand that fuel costs are a big issue these days but to be honest, there is nothing out there that gives me as much satisfaction behind the drivers seat than the 4Runner. To me, it's worth it!

 

[alaskaman]

I understand that fuel costs are a big issue these days but to be honest, there is nothing out there that gives me as much satisfaction behind the drivers seat than the 4Runner. To me, it's worth it! [/B][/QUOTE]


Ditto!

 

[Falls]

What is your interest rate on your loan ??

 

[Uneek]

The other alternative would be getting a used econobox.

I might be facing the same situation if I change jobs, from a zero-mile commute (public transit now) to a 70-80 total commute. I figured at $5/gallon and the mileage I'm getting with the 4Runner, the work commute strictly would cost me about $5800 annually in fuel. With a vehicle that gets 30mpg, at $5/gallon, it would be $3500 in annual fuel costs. So even getting a used econobox, it would take some time to break even but not factoring an additional premium to insure the econobox.

In the end it may not be worth spending a few thousand to save a few hundred.

 

[scott78945]

What is your interest rate on your loan ??

Rate is 3.9%. I will only be saving about $500 in the end if I pay it off now. The main reason I am looking to pay it off is so I have that extra money per month for the extra expenses of owning a home. I know at some time I will need a new vehicle but I am hoping that won't be for awhile. When that time comes, my priorities will have changed and I'll have to see what is right for me at that time.

 

[Wolf]

10mpg less doesn't equate to driving something inferior and the erosion of your happiness! With the cost of having a vehicle these days you gotta really like what you drive and be enjoying your time behind the wheel....so for me I could never consider trading a 4runner for anything ...especially new Camry!!! what are you thinking. Pay it off and just get used to paying more for gas- at least you'll have a better chance of leaving the pavement when the riots/revolution begins. Your better off buying an older junker little 4 banger until we start seeing some new tech that really increases MPG in the next decade.

 

[nc211]

Keep it, don't pay it off, yet.

Don't make any major purchases or payoffs until you've got the house lined up, and financing in place. Basically, don't move a muscle right now. I say this, because obtaining financing for home purchases these days is strict. Gone are the days of "reasoning" or "translating" info on a mortgage application. Everything will be checked and re-checked for verification. Your job, your tax returns, your bank statements, etc... Lenders are spooked by what has happened, and they're playing it straight down the middle. Don't listen to any loan officer who tells you nothing has changed. They're just telling you what needs to be said to get your business. Lenders want A+ credit and stability in their borrowers. Making big purchases of any kind right now creates concern for stability. So many borrowers over the past few years got mortgages, followed by new cars, boats, motorcycles. It's one of the problems with the whole SubPrime mess on the variable rates. 2.5% for the first 24 months left mortgage payments super low. So folks used that extra money for toys. Lenders ARE looking for that pattern now with their borrowers, and are either avoiding them, or increasing the rate. So, stay stable, stay still, show you've not only made your payments on the car, but have amassed a nice nest egg as well. If they say your debt-to-income level is too high, then pay it off. But if they don't, then skate through the mortgage process, wait about 90 days for the dust to settle, and then take a look at the car situation. Trust me, once you get the keys to the new house, all of the sudden the couch doesn't fit in the living room, the tv is too small and you "need" a 52in plasma, the fridge doesn't work right. Etc... It happens.

Since you're only talking about $500 in savings if you pay it off, I'd wait and let that cash in your account show on your mortgage application. You might need it for additional down payment strength to avoid PMI "Private Mortgage Insurance". With so many defaults these days, I think PMI rates have skyrocketed. If you're over 80% LTV, then PMI usually kicks in. I don't know if you can do the 80-10's anymore to avoid it "80% LTV 1st mortgage, 10% second mortgage, 10% down from you".

Also, I note you're location, in central NY. I assume your 4runner is 4x4? I also assume you guys get some pretty hefty snow up there? The Camry won't offer you anywhere near the mobility in the snow, which could be a problem. You know Murphy's Law right? Well, this sounds like the perfect set-up for another entry.

Gas prices will fall at some point. They simply have to, as the market can't continue to support these prices. Teachers will quit, airlines will fold, taxes & bills will go through the roof to cover fuel costs for road repairs/garbage collection/etc... They will fall. Especially since the true cost of a barrell of OPEC oil is still only about $65 in today's market. That is the cost of the last barrell of the day, which sets the price. The 1st barrell is usually much cheaper. It'll fall.

 

[TheBlueWave]

What about depreciation of the very new vehicle you plan on trading in? And what about the hit you will take upon trading vs. selling?
Unless your car is old, depreciation over its first five years will outweigh any gas costs plus the depreciation of your new car!
I would keep it until its older and depreciation slows down considerably.
You could pay cash for an econobox. It may not look great, but the cheap insurance and low maintenance requirements would be a better alternative than dealing with depreciation.
I just bought a house too and put my runner for sale. But reconsidering all costs I decided to just hang on and drive it. I can afford it, I was just sick of spending $160/month on gas. So now I just drive less miles and drive slower!
Good luck with everything!

 

[Falls]

I love the new Camry , totally cool looking for a sedan IMO and would love to own one , BUT !!! NOT at the cost of losing my 4R .

You can invest that money at a higher interest rate until you pay off the 4R . Its tricky decision and understand the objective of owning or purchasing a home and not wanting a payment hanging over you head or having the bank say that add'l payment puts you past the the comfort zone for yourself or the bank for that matter .

 

[scott78945]

!

Thanks all for your comments!! Especially those in regards to purchasing the house. I moved back with my parents so the only debt I have is this truck. This is why I was looking to pay it off so it was totally gone and then I was going to start banking my money again. I will more than likely keep the Runner as I do love driving it. I guess I'll just have to get used to the cruise control and give myself more time to get to work in the morning.

 

[charlier180]

Re: !

Wouldn't keeping the 10K instead of paying off the 4Runner be better in the long run? Having the 10K to use towards a house down payment or to have as part of an "emergency fund" or to help fund other "house expenses" that always come up after buying a house.

If the house pruchase is 1-2 years away you could park the 10K in a CD for a year at 4-5%. Not a great return but you will not lose the money and make $400-500 in the meantime.

Just a few thoughts for your consideration.

 

[loner]

The other alternative would be getting a used econobox.

I might be facing the same situation if I change jobs, from a zero-mile commute (public transit now) to a 70-80 total commute. I figured at $5/gallon and the mileage I'm getting with the 4Runner, the work commute strictly would cost me about $5800 annually in fuel. With a vehicle that gets 30mpg, at $5/gallon, it would be $3500 in annual fuel costs. So even getting a used econobox, it would take some time to break even but not factoring an additional premium to insure the econobox.

In the end it may not be worth spending a few thousand to save a few hundred.

Same situation here - I've been debating selling the 4Runner and getting a used 4-banger or a motorcycle. Neither would pay for itself within 3 years, and my plan has been to get a new car in 2.5 more years anyway. Besides, I really like my 4Runner.

 

[Wolf]

I hope nc211 is correct and he's got some great input on this topic. I've just felt your better paying for things now if you can than putting things on credit or paying interest.... -time=inflation. Saving $500 over the cost of several years in a cd doesn't make sense to me because it's not much $ to even consider -$20/month?...but re-assessing your finances with a clear slate as in no payments might. IMO simply having a 4x4 in an unstable society gives a little more peace of mind than some other alternative. ...but then again... MadMax / The Road Warrior made way too much an impression on me as a child!

 

[nc211]

Thanks Wolf! I hope I am too, as $4.10 a gallon, which is pretty cheap in comparision to other parts of the country, still sucks! I won't go into a big ole' discussion on why I believe 110% that oil will tank. I've already laid that argument out in other posts.

But on the bright side to keeping your SUV, is the same argument for selling it...supply and demand. Look at it like this: when oil tanks and families of 5 are tired of being cramped into their new civics and want their SUV back, guess what? They're going to go to the used car lot to buy it back, only to find that most were sold at auction and shipped down to central/southern america and sold at large profits. There is a huge appetite for them down there, and is quickly becoming the destination spot for all of these trade-ins. So, if you still have your 4runner, the best SUV built with bullet proof reliability, and people are ready to accept $1.50 prices again...well...you're lookin' pretty good!

Of example: Toyota Prias. 18 months ago, they were "niche" cars, not many around, not a huge demand for them. They took a while to sell too. Now? Well, for example: on cars.com in my area there was a 2004 with 67k miles, basic model. KBB was $18k for top retail value..dealership sold it for $24,500. There is another one on there now too, much the same. That's just stupid if you ask me.

 

[peter78]

I understand your concern. Gas has doubled in about a year and from what I have heard by almost anyone it is going up in 2009. I would think $5 a gallon is not far away. On the other hand if you buy a Camry, then the price drops you look pretty stupid. Having a 2005 is not brand new, people trade in 3 year old cars all the time. Also, when you buy a new car, you have more equity.

I have been thinking of getting a new car to replace a 92 Accord wagon. I really want another 4Runner, but I have to be honest, the price of gas scares me. I have thought of getting a 4 cyl Accord, I like those, or maybe a RAV4 or Subaru Forester, or of course a new 4Runner. I think it it would be nice to have one big car in my family and one smaller car.

I am not real sure of your situation, do you drive a lot, married, single. It might make sense to get a Camry, just remember, used V8 SUV's are at a all time low, Toyota would be better, but you will be taking a hit, but is it a real dumb idea? No, but it does give you a bit of a hit in the pocket book.