To buy used or not - your opinions
05-14-18, 06:18 PM
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To buy used or not - your opinions
Hey guys,
Been lurking here on and off for a while. Here's my situation - tell me what you would do if you were in my shoes:
Wife's Rav4 lease is up end of July. We need to stay at or under $300/mo. We've been leasing the last 6-7yrs so we can keep our payments low while we navigate life.
I really want to buy a used GX or Limited 4runner but finding one under $15,000 with less than 100-120k miles on it is nearly impossible. Add to that the average age of the vehicle is around a 2007 so you're looking at something around 11yrs old with say 130,000 miles on it for around $13-15k.
Say I get normal 5yr loan, I'd be looking at a vehicle in 5yrs that would have around 200,000 miles on it and it would be over 15yrs old. I really want to pull the trigger but at the same time, on the surface it really doesn't sound smart does it?
Should I just lease again for around 300/mo, wait about 3yrs until the last kid is out of daycare and I could (theoretically!) increase my payments and get into something with less mileage?
Your thoughts!
Been lurking here on and off for a while. Here's my situation - tell me what you would do if you were in my shoes:
Wife's Rav4 lease is up end of July. We need to stay at or under $300/mo. We've been leasing the last 6-7yrs so we can keep our payments low while we navigate life.
I really want to buy a used GX or Limited 4runner but finding one under $15,000 with less than 100-120k miles on it is nearly impossible. Add to that the average age of the vehicle is around a 2007 so you're looking at something around 11yrs old with say 130,000 miles on it for around $13-15k.
Say I get normal 5yr loan, I'd be looking at a vehicle in 5yrs that would have around 200,000 miles on it and it would be over 15yrs old. I really want to pull the trigger but at the same time, on the surface it really doesn't sound smart does it?
Should I just lease again for around 300/mo, wait about 3yrs until the last kid is out of daycare and I could (theoretically!) increase my payments and get into something with less mileage?
Your thoughts!
05-15-18, 07:41 AM
#2
Pole Position
The financial-independence guy inside me is asking "what can they afford without a payment?" but I realize that kids are way more expensive than their size would indicate.
Ford is discontinuing the Fusion - they're nice cars, and I bet you could really get a good deal on one right now. If you want something with more cargo room go for a C-Max. They have surprisingly low step-in height and a Hybrid Titanium has a 36-month lease in the low $200's, letting you save $100 a month for the next vehicle or to build an emergency fund.
I would pass on the Focus, as AFAIK they still have the self-destructing PowerShift transmission in them.
The thing about leasing - you still have to negotiate the price first. With the incentives on the Fords ($5000-ish) you may not be able to get much off, unless they've got a model that's been hard for them to move. Usual advice about buying at the end of the month, skipping the "fabric protectant" etc. apply.
Chip H.
Ford is discontinuing the Fusion - they're nice cars, and I bet you could really get a good deal on one right now. If you want something with more cargo room go for a C-Max. They have surprisingly low step-in height and a Hybrid Titanium has a 36-month lease in the low $200's, letting you save $100 a month for the next vehicle or to build an emergency fund.
I would pass on the Focus, as AFAIK they still have the self-destructing PowerShift transmission in them.
The thing about leasing - you still have to negotiate the price first. With the incentives on the Fords ($5000-ish) you may not be able to get much off, unless they've got a model that's been hard for them to move. Usual advice about buying at the end of the month, skipping the "fabric protectant" etc. apply.
Chip H.
05-16-18, 05:34 PM
#3
In short, buying gives you equity but the trade-off in your case is a long term note on an old truck. I don’t know your situation, so I hesitate to say which is the best option for you.
If you buy a $15k 4Runner or GX, I suspect it’s getting close to the bottom of their depreciation curves. Assuming the truck is in relatively good condition and has less than 200k mi on the odo once you have it paid off, I think it’ll be worth no less than $5k. You’re already seeing that older Toyota / Lexus SUV’s command a healthy price on the used market because in large part they’re so robust and reliable.
If you’re already starting with >150k mi on a 4Runner of GX, you’re going to run into part failure and/or want to begin proactively replacing some parts which will cost you money. Figure $1k/yr over the course of your loan. Therefore, you’ve paid $20k for the truck over the course of 5 years, but you’ll have $5k in equity. Call it $20k out of pocket, but you’ll get $5k when you sell it - but, you have to sell it to get that money back of course. Once you pay off the truck and have no monthly payments, the financial argument tilts dramatically in your favor vs leasing.
Let’s look at leasing. Over the same 5 years, you’ll spend about the same on $300/mo lease payments (and likely two lease start-up fees). If you can find a lease deal that covers maintenance, it could swing the lease finances into your favor at least until the buy side is paid off when buying looks better and better. However, what you’ll gain with a lease is trouble-free motoring and quite likely very few headaches.
Alternative - Check out buying a used 2012-2014 Nissan Leaf for $8-12k, which have depreciated like a rock because I think Americans surprisingly can’t remember expensive gas. It’s got leather and a heated steering wheel. Its not AWD, but FWD with snow tires is pretty good and the seats fold flat for storage. It’s quiet and isn’t terribly slow plus NO more gas stations. Buy it while it’s cheap (almost half the price of your SUV options) and laugh all the way to the bank. I would, but I forgot about expensive gas! He he.
Good luck!
If you buy a $15k 4Runner or GX, I suspect it’s getting close to the bottom of their depreciation curves. Assuming the truck is in relatively good condition and has less than 200k mi on the odo once you have it paid off, I think it’ll be worth no less than $5k. You’re already seeing that older Toyota / Lexus SUV’s command a healthy price on the used market because in large part they’re so robust and reliable.
If you’re already starting with >150k mi on a 4Runner of GX, you’re going to run into part failure and/or want to begin proactively replacing some parts which will cost you money. Figure $1k/yr over the course of your loan. Therefore, you’ve paid $20k for the truck over the course of 5 years, but you’ll have $5k in equity. Call it $20k out of pocket, but you’ll get $5k when you sell it - but, you have to sell it to get that money back of course. Once you pay off the truck and have no monthly payments, the financial argument tilts dramatically in your favor vs leasing.
Let’s look at leasing. Over the same 5 years, you’ll spend about the same on $300/mo lease payments (and likely two lease start-up fees). If you can find a lease deal that covers maintenance, it could swing the lease finances into your favor at least until the buy side is paid off when buying looks better and better. However, what you’ll gain with a lease is trouble-free motoring and quite likely very few headaches.
Alternative - Check out buying a used 2012-2014 Nissan Leaf for $8-12k, which have depreciated like a rock because I think Americans surprisingly can’t remember expensive gas. It’s got leather and a heated steering wheel. Its not AWD, but FWD with snow tires is pretty good and the seats fold flat for storage. It’s quiet and isn’t terribly slow plus NO more gas stations. Buy it while it’s cheap (almost half the price of your SUV options) and laugh all the way to the bank. I would, but I forgot about expensive gas! He he.
Good luck!
Last edited by Johnny Rad; 05-16-18 at 05:37 PM.
05-17-18, 08:09 AM
#4
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I love new cars, and I'm also a fan of buying used cars that are 3-5 years old. We still own our 2004 GX470. Last year from my local Lexus dealer I bought a used 2014 Mercedes E350 for $27591, which was 56% off the original new window sticker price of $62,300 as I saw on the original window sticker that the previous owner folded up into the user manuals.
That 3-year old car buying was the best way ever to buy a great premium car and save a lot of money, and still have some warranty left. That would also be equivalent to buying a car coming off a 3 year lease, same value. If you decide to buy the RAV that you are leasing, keep in mind there is a purchase option fee usually around $300 to $500 that leasing companies charge, and a disposition fee of about $350 if you don't buy the car at the end of the lease.
When you lease, the reason why your lease payments are so low, is that with leasing you are paying for only 50% of the car, which means 50% of the depreciation of the car, as most cars depreciate 50% over the first 3 years. See with leasing the rent charge is essentially you borrowing 50% of the car, only you have to give the car back and you have no equity in it. When you buy a new car, you are paying for all of the depreciation, which is why the loan payments are more, you are borrowing 100% of the value of the car, because at the end of a 5 year loan, you will own the whole car..
i am not sure how easy it would be for you to get a loan on a 10 year old high mileage vehicle, they are simply too risky for the lenders, or maybe they charge you a real high APR. One thing is for sure, if you end up buying a Toyota or Lexus or Nissan from 2004 to 2011 model years, make sure they had their dashboard replaced under the Toyota/Lexus special extended warranty for that part. I covered this extensively with several blog posts on our CarBuyingTips.com site. Toyota had to replace melted and cracked dashboards on up to a million or so models, with owners still on waiting lists to get repaired. Our dashboard was fixed for free in 2015, several years outside the normal warranty. Nissan owners filed a class action lawsuit in Florida to get Nissan cracked dashes replaced, and I am still receiving complaints from people every single week about cracked dashboards on Lexus, Toyota, and Nissan, so tread carefully make sure it was replaced under the warranty before you consider one. If you buy one of those cars, you are likely to develop a cracked or melted dashboard.
make sure whatever car you buy has maintenance records either from the owner, or if the dealer can pull them.
The main point here is that buying a 10 year old used car you are just asking for trouble. We spend probably $1000 a year in repair bills now on the 2004 GX and are probably ready to retire it. So if you buy used you are better off buying a 3-5 year old car, and if it is outside warranty or getting close to ending, then buy an extended warranty, or put $2,000 to $3,000 aside in a savings account that I refer to as your own "claims reserve account" to cover future repairs.
You need to spend some time on our consumer advocate site reading the used car section and the extended warranty section, and in our search box on our site, enter the search for the "cracked dashboards" and get up to speed on the status with all the melted dashboards.
Lastly, read by blog post below about some very savvy tips on buying a used car as we applied it to buying our Mercedes E350 last year, using all the tips we have been espousing the last 20 years on our web site.:
https://www.carbuyingtips.com/articl...e-and-save.htm
That 3-year old car buying was the best way ever to buy a great premium car and save a lot of money, and still have some warranty left. That would also be equivalent to buying a car coming off a 3 year lease, same value. If you decide to buy the RAV that you are leasing, keep in mind there is a purchase option fee usually around $300 to $500 that leasing companies charge, and a disposition fee of about $350 if you don't buy the car at the end of the lease.
When you lease, the reason why your lease payments are so low, is that with leasing you are paying for only 50% of the car, which means 50% of the depreciation of the car, as most cars depreciate 50% over the first 3 years. See with leasing the rent charge is essentially you borrowing 50% of the car, only you have to give the car back and you have no equity in it. When you buy a new car, you are paying for all of the depreciation, which is why the loan payments are more, you are borrowing 100% of the value of the car, because at the end of a 5 year loan, you will own the whole car..
i am not sure how easy it would be for you to get a loan on a 10 year old high mileage vehicle, they are simply too risky for the lenders, or maybe they charge you a real high APR. One thing is for sure, if you end up buying a Toyota or Lexus or Nissan from 2004 to 2011 model years, make sure they had their dashboard replaced under the Toyota/Lexus special extended warranty for that part. I covered this extensively with several blog posts on our CarBuyingTips.com site. Toyota had to replace melted and cracked dashboards on up to a million or so models, with owners still on waiting lists to get repaired. Our dashboard was fixed for free in 2015, several years outside the normal warranty. Nissan owners filed a class action lawsuit in Florida to get Nissan cracked dashes replaced, and I am still receiving complaints from people every single week about cracked dashboards on Lexus, Toyota, and Nissan, so tread carefully make sure it was replaced under the warranty before you consider one. If you buy one of those cars, you are likely to develop a cracked or melted dashboard.
make sure whatever car you buy has maintenance records either from the owner, or if the dealer can pull them.
The main point here is that buying a 10 year old used car you are just asking for trouble. We spend probably $1000 a year in repair bills now on the 2004 GX and are probably ready to retire it. So if you buy used you are better off buying a 3-5 year old car, and if it is outside warranty or getting close to ending, then buy an extended warranty, or put $2,000 to $3,000 aside in a savings account that I refer to as your own "claims reserve account" to cover future repairs.
You need to spend some time on our consumer advocate site reading the used car section and the extended warranty section, and in our search box on our site, enter the search for the "cracked dashboards" and get up to speed on the status with all the melted dashboards.
Lastly, read by blog post below about some very savvy tips on buying a used car as we applied it to buying our Mercedes E350 last year, using all the tips we have been espousing the last 20 years on our web site.:
https://www.carbuyingtips.com/articl...e-and-save.htm
Last edited by JeffO; 05-17-18 at 08:15 AM.
05-17-18, 09:19 AM
#5
Pole Position
We spend probably $1000 a year in repair bills now on the 2004 GX
Chip H.
05-19-18, 08:07 AM
#6
The other thing to consider is that you are buying a vehicle that, if properly maintained, will last 300k-400k miles. I have an 07 4runner with 211k and an 05 gx with 140k. Botherwise run like scalded dogs
05-20-18, 04:14 PM
#7
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Used or New
We had a 98 100 series landcruiser that unfortunatly got totaled..It had 185k miles on it..Found a 04 gx470 with 103,000 miles.We paid 15,000 for it..Spent its whole life in the bay area and was always garaged..Took me 3 weeks yet I found it.Keep looking as they are out there..
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05-20-18, 07:35 PM
#8
I picked up my 03 for about 7500 out the door with 135k miles. Had it a year and a half, have had no problems. This forum has you covered on the fixes if you are handy or cheap and willing to get dirty. I would go for high miles with a lexus maintenance history and no payment.
05-25-18, 05:04 PM
#9
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Some good info here. I went to Lightspeed for a loan. It's not an auto loan, it's a credit loan. You tell them what you're buying and if approved they give you the cash. You can get some deals on buying any car with cash as opposed to going for a loan. For me that saved a good chunk of change. As for buying an older GX... look for one from a warmer area that doesn't see much road salt. Mine is an 06' that spent most of it's life in PA and NY. Rust is average but I would be happy with less. As for mileage, I don't think that's a huge issue. I think the key is finding a GX that has a solid service history. You can go to drivers.lexus.com [or something like that...] input the VIN and lexus will give the entire service history that been done at any lexus dealer/service shop. As you probably know, the timing belt needs to be changed every 100k miles or so, so look for one that's been relatively close to that, or you have a nice bargaining chip to bring down price. Also bring a PPI when you buy the car. They seem pricy but can save you a ton. I did that for mine and he found a few 'easy fix' things wrong with my GX that helped me in the bargaining process, like a bad TPMS sensor, hole in muffler... things that were quite easy to fix. When it comes down to it, I have an 06' GX with 140k miles that I payed $8k for out the door. I put in an extra $500 for things I thought needed to be done and 'upgrades', and I am extremely happy. It is my second favorite car behind my 69' 912 (for which I now have a reliable tow vehichle, lol). Good luck.
05-31-18, 06:23 PM
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Really appreciate all of the info everyone!
Sorry it has taken me so long to get back. We're in the process of building a house so I've been working my tail off. Car situation has fallen back for now.
It certainly is a tough call either way. My best friend has been in the car biz for over 15yrs and he says just to do one more lease, then when we can afford something like a 3-5yr old car it makes more sense. But like others have said, when the loan is up and I've got 200k on the dash, it's hard to justify regardless. Damn I hate this process haha. I need to find a little old lady with a new GX460 who has no idea what she has and is ready to move into a nursing home lol
Sorry it has taken me so long to get back. We're in the process of building a house so I've been working my tail off. Car situation has fallen back for now.
It certainly is a tough call either way. My best friend has been in the car biz for over 15yrs and he says just to do one more lease, then when we can afford something like a 3-5yr old car it makes more sense. But like others have said, when the loan is up and I've got 200k on the dash, it's hard to justify regardless. Damn I hate this process haha. I need to find a little old lady with a new GX460 who has no idea what she has and is ready to move into a nursing home lol
06-01-18, 08:41 AM
#12
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I just bought a 2007 GX470 from a Lexus dealer with 111,000 miles. It was a one owner, absolute clean Carfax, new Michelin’s, timing belt and water pump changed at the 90,000 service, etc. I’m telling you it looks like it came off the showroom floor. I’ve been diligently searching for months online and luckily found this on CarGurus. Best advice is to be patient. I’m sure there are still some great used ones to be had! Keep us posted.
06-01-18, 10:38 AM
#13
I just bought a 2007 GX470 from a Lexus dealer with 111,000 miles. It was a one owner, absolute clean Carfax, new Michelin’s, timing belt and water pump changed at the 90,000 service, etc. I’m telling you it looks like it came off the showroom floor. I’ve been diligently searching for months online and luckily found this on CarGurus. Best advice is to be patient. I’m sure there are still some great used ones to be had! Keep us posted.
May I ask you please if you purchased it from a Lexus dealer? If not, what type of inspection was there on the vehicle?
06-04-18, 11:50 AM
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I just bought a 2007 GX470 from a Lexus dealer with 111,000 miles. It was a one owner, absolute clean Carfax, new Michelin’s, timing belt and water pump changed at the 90,000 service, etc. I’m telling you it looks like it came off the showroom floor. I’ve been diligently searching for months online and luckily found this on CarGurus. Best advice is to be patient. I’m sure there are still some great used ones to be had! Keep us posted.