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Old 02-07-2012, 12:09 PM
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Default Considering buying a new Tacoma

This is going to be a bit long-winded, but I would greatly appreciate if you took the time to read this and weigh in with your opinions.

My truck search has been going on for a few months already, and so far what I’ve found in the used truck market has been pretty discouraging

I’ve looked at T100’s, Tacomas, 4Runners and the like, all various years and various conditions and I have not yet found “the one”. I do not believe my discouragement is due to impatience, I am not under pressure to have a truck right now. Rather, what has been most discouraging is I’m finding that most of the time, folks have either run up the miles on these trucks, over-priced them or have hack-jobbed the poor thing nearly beyond recognition. There isn’t much out there that fits the specific criteria I’m looking for. My experience with my last truck taught me a few things about having a used vehicle as a DD, namely what it is like to always have the thoughts “will it start when I turn the key, what the heck is that new noise, and how long will it go before a breakdown?”

I’ve also observed first-hand the “Toyota tax”, and how most folks with 10-15 year old Toyotas somehow believe they are gold-plated. Not to say they aren’t, Toyota has produced a highly-demanded truck for years now, and the fact that a used Toyota truck is very resilient to depreciation (even in this economy) speaks volumes about this. (As a brief aside, I realize that part of a slow economy is demand for used vehicles increases, making today a potentially better time to get a new truck).

A solution I’ve begun to consider is what it would be like to have my own gold-plated truck, and how smart it would be (or not be) to just buy a new truck and plan on keeping it a long time. One reason I’ve had difficulty finding the right used truck is, as mentioned, I have specific criteria in mind for what I want. I want a vehicle that would be dead-reliable as a DD, economical, versatile and something that will benefit me in the (very) long-term. I think that when I am on my own, having a pickup with all the utility it inherently provides, with all sorts of situations that come up in life, would be invaluable over a period of many years. A new Tacoma meets all these criteria for me, so my big question is if now is the right time for me to make the investment.

To provide a little background about myself for those who don’t know, I’m in my Junior year of college. I don’t receive any financial assistance from the government, or my parents for educated-related expenses. I still live at home and as such am able to avoid major expenses like rent, groceries, etc. I have a scholarship that will cover my tuition and fees through the end of my 4-year program. I work part time, have for years, and believe I will have a steady job until I graduate before I need to find work again. I have a good cash reserve built up. Looking forward, I’ve already begun saving for an MBA out-of-state, and am exploring opportunities I have to minimize costs while I pursue a graduate degree just like I have for my undergrad. I think if all goes as planned, I’ll be able to work as a “TA” for the University I want to go to, which would cover my tuition, fees, and give me enough money to cover living expenses while I’m on my own. An important part of this plan, especially since I would be out-of-state, is having a vehicle that can get me there, get me back, and be something I don’t have to think about while I focus on my education.

I’ve spec’d a new Regular Cab 4x4 Tacoma, with everything I need and nothing I don’t, and found the price came in around $23k. I played around with a payment calculator, and estimate I would qualify for around 4.25% APR if I financed it over 72 months (I have been working on building an excellent credit rating ever since I got my first job). Of course, the full coverage insurance for a 21-year-old male could be a game-ender (haven’t looked into that yet, but I do have a spotless record), but this 6-year plan would keep the payments low while I’m in school and working part time. I do plan on trying to work full-time when I’m not in school, and I would be using the extra earnings to get the loan paid down. I would be able to comfortably make a 20% down payment, and still have the cash reserves to make payments for several months even if I were out of a job. I think I’ll be able to stay ahead of depreciation in this way, and even over a period of six years I would never find myself “upside down” on the loan. SHTF, I sell the thing, use the money to pay off the balance of the loan, and start fresh without damaging my credit rating.

I feel like I’m on the right track, thinking this through, but having never done this before I understand that I may not have thought of everything. Your thoughts?
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Old 02-07-2012, 12:29 PM
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hard to say. Could strap you financially. ~@280 for a car payment then what is ins for a 21 yo on a new tacoma 2-300 mo? yer nuts. How much will you have left over for eats, bs, a ring

Buy a 1k beater to get you round, bank what you'd be spending on a new car and ins and in 6 years when you are working full time can afford to almost buy almost 1/2 the vehicles you want in cash. 45k you'll save in that time.

what about a down payment for a house etc in 6-10 years.

use your part time job $ to have fun, travel.. you will have the rest of your life to work and pay for a car and house.

Kids these days
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Old 02-07-2012, 12:32 PM
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Hey Rick, it sounds like you've done your homework and have a good plan.

My only advice/thoughts come from first hand experience: as soon as you drive that vehicle off the lot, it loses value. If you're financing it and you get into a wreck, you stand to lose a lot of money. If you pay the vehicle off and never wreck it, then you stand to recoup some of your investment down the road, maybe.

Also, upkeep, repairs and insurance on a new vehicle sometimes outweigh maintenance on an older, used vehicle that you pay cash for.

I'll be interested to hear what you decide to do.

Edit: Wes must have been writing at the same time, so I didn't see his post until after, but he has some really good points too! Plenty of time to be in debt later.
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Old 02-07-2012, 12:34 PM
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Sounds like you are decades beyond your years in financial thinking. Goodonya.

One thought, I have probably bought my last new vehicle because I simply cannot make a value proposition for one make sense (not to mention, better to put money toward an investment, which a vehicle will NEVER be). Even new vehicles can be a worry, that is never a done deal. Certified used seems to make the most financial sense, and provide the best value along with security, at least IMHO.

You drive a new vehicle off the lot, you just kissed away thousands instantly. You buy a good well researched and dickered used vehicle off the lot, and it is worth what you paid for. Hard to argue with.
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Old 02-07-2012, 12:35 PM
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You're a smart kid, you know what's right in the back of your mind. I'll add a few thoughts, though.

First, set a budget, a firm budget. It can have a little cushion but it needs to be basically rock solid. If you can honestly pull $23K, then buy the best fit at $23K and hold to it. It's very easy to rational yourself over your head.

I would never finance a truck I could not afford. I'd pay cash or have the cash available to pay it off. Taking a loan at very low rates might be a tactic I'd use to manage cash flow. When we are forced to replace an appliance, we might do the 12 months same as cash and let the money sit until 11 months and 28 days rather than writing a check. Even an insulting 0.2% interest on $1,000 in savings is $20. But other than our mortgage I've never been able to take on a loan where I pay someone interest because I was too lazy, impulsive or undisciplined to save the money myself.

Planning to sell it should you hit a tough spot is a sure sign IMVHO that you cannot afford the truck. What happens if the situation you find yourself in is because of a tough job market (like that ever happens...) and there is no market for a lightly used truck?

Another point, a regular cab base Tacoma will not hold its value, so don't expect your 'gold' truck to necessarily be the same as the Tacomas you're looking at used. They are almost definitely XtraCabs and that is a major valuation holder. Personally I'd (like your thinking) buy the most base 2.7L 5-speed XtraCab (er, Access Cab) 4x4 if I was in the market, but that is because I buy and hold trucks for decades.
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Old 02-07-2012, 12:47 PM
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Quote:
Originally Posted by wesintl View Post
hard to say. Could strap you financially. ~@280 for a car payment then what is ins for a 21 yo on a new tacoma 2-300 mo? yer nuts. How much will you have left over for eats, bs, a ring

Buy a 1k beater to get you round, bank what you'd be spending on a new car and ins and in 6 years when you are working full time can afford to almost buy almost 1/2 the vehicles you want in cash. 45k you'll save in that time.

what about a down payment for a house etc in 6-10 years.

use your part time job $ to have fun, travel.. you will have the rest of your life to work and pay for a car and house.

Kids these days
I echo Wes' comments. you can find something reliable and cheaper than a new truck.

whatever you end up getting and especially if you get a new truck, get good complete insurance and KNOW YOUR POLICY. It sucks when you loose a 23k truck and get nothing for it. Trust me, it hurts.
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Old 02-07-2012, 12:49 PM
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Sounds good until you meet a girl and then all the sudden a regular cab truck isn't big enough

I wouldn't do it. I hated being in debt with my truck and some other things. I know it's a hard place finding a balance between something that will be used and cheaper (and maybe not as reliable) and something that is new and more expensive (but hopefully more reliable).

When SHTF it's hard to come out on top if your junk isn't paid for. And don't think that it won't happen to you. It can, and it can come at any time.

Just a thought - just because it's not Toyota doesn't mean it's not reliable. And if it's not reliable, the other side of the coin is that domestics are a lot cheaper to work on and parts are more readily available

My buddy was looking into Tacomas and last week ended up buying an extended cab 4x4 Chevy Colorado for probably 1/2 the price of an equivalent Taco. I think he'll come out way ahead in the long run.
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Old 02-07-2012, 01:29 PM
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Based on everything you have said, it sounds like you can swing the monthly payment for an entry level truck. If it comes with a decent warranty, that can save you some money on weird, unexpected repairs while you're making payments. That's a good thing. If you're headed to a college out-of-state in a few years, reliability will be key. I would say that if you're really satisfied that you've explored the used truck market thoroughly, then go for it. There is nothing quite like buying a new car -- everything works, and you're not dealing with PO repair jobs and mystery wiring.

With certain vehicles, buying new makes more sense than buying used. Jeeps are often like this because they hold their value so well. Toyota trucks may be the same. There's no sense in paying top dollar for a worn-out truck when you can get a brand new one and just enjoy it.

However...

Are you sure that you have looked at all the used trucks out there?
Have you looked out-of-state?
Have you enlisted the power of the Toyota Nut Netowrk (that's us) to help you find a clean, low mileage, reliable truck at a reasonable price?
If you put us to work, we can find great things for you.

If you have kind of set your heart on a new truck, then I say go for it. You'll love it, you'll take good care of it, you can afford it, and if the SHTF, you're not making $600/month car payments.
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Old 02-07-2012, 02:13 PM
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One of my few regrets in life is I grew up too fast- meaning I went right from college to a mortgage & car payment, didn't even take a week vacation. Felt good at the time like I was getting ahead of the game, by taking 8 years to get an undergrad I'd already watched some of my peers climb the ladder a little faster, which was hard to do. But today it's also a bummer to consider I may never get to Europe, or never drive to Alaska, at least not until my kids are out of the house and who knows what kind of shape I'll be in at that point, or if I'll even be into it. We both wish we would have screwed off a little more.. but credit card payments, rent, then mortgage, then car payments.. they always made that stuff impossible.

Another vote for borrow dad's Bronco a little more, or pay cash for your next ride.
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Old 02-07-2012, 02:38 PM
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Quote:
Originally Posted by Red_Chili View Post
You drive a new vehicle off the lot, you just kissed away thousands instantly. You buy a good well researched and dickered used vehicle off the lot, and it is worth what you paid for. Hard to argue with.
I agree with Bill?

Seriously though. Not having looked, I don't know if used Tacomas are holding more of their value than the hit you'd take buying new and just driving it off the lot? I know everything seems stable now but how about 2-3 years out when you've paid down enough of the new loan so that the truck value vs. balance owed is about equal? If you were to buy new today and in 6 months something happens where you can no longer afford the truck, you could very well be under water on the truck even with 20% down.

I know when we were looking at used Sequoias I couldn't believe that 3 year old rigs with 60K miles were still commanding up to $40K

I also agree about limiting yourself to Toyotas, and a truck. IMHO a 2 door truck anymore isn't all that practical. Not long term...

And do you really need a truck now? Sure, they offer some versatility but how often will you really need that utility? You can always rent a truck for a day, or two, or a week.

Hard to argue also with those saying to hold off as well...I understand the wanting and needing something reliable argument though for sure...Peace of mind is definitely worth something...In the end I'd still look for something CPO with a nice warranty.

Another option is to lease? I've never been a fan of leases but if your long term goal is to own the vehicle, it can be a way to keep the payments down for now...Of course in the long run you'll end up paying a lot more for the vehicle. I leased my Durango way back when and it worked out well for me in the long run. It was the only way I could afford the truck and as it worked out, when the lease was up there was a glut of Durangos on the market and the leasing company did NOT want my Durango back - I was able to negotiate a lot off the residual price, somwhere north of $5K as I recall.
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