Help on new purchase

Hi,

I just got back from the dealership and sometimes the excitement makes my brain go dead. Thank god I didn't buy anything because I really almost signed a bad deal until I got home and put it all together.

Went in for a 2023 SR5 premium (I have a 2006 SR5 now and it's been great to me!) so ready for a new car. I test drove all models. I fell in love with the TRD but not the payments. I originally was thinking I would buy this car and put $10,000 down. I asked about a lease option and the payment went down to $560. That was very enticing to me. They did not have the vehicle that I wanted in stock so they are having it shipped. Once I got home I realized I would be putting $10,000 down on a leased vehicle and I will end up paying a lot more although my monthly payments will be a lot cheaper. I would keep the car and I definitely think that the fifth GEN value is going to go up after the sixth GEN comes out because the sixth GEN is going to be a hybrid four-cylinder. The back window won't roll up and I don't think it's going to be as good as the fifth gens. I could be wrong because my research is just started, but that's just my thoughts.

Here's the deal they offered and I just need someone to help me or at least let me know if I'm on the right page.
Looking at a white Trd off-road 2024. It has a moonroof and all the bells and whistles that I want. ( stock tires and no rack, I will do that myself) It's $50,000 putting $10,000 down and my residual would be 32,000. If the payment is 567 I will have paid $20,000 for this car in 3 years and then the 10,000 I'm putting down I plan on keeping the car so that would be another 30,000 and now we are at 60 K.
Can somebody please talk some sense into me. I feel like the price is high and I don't feel like I should be putting $10,000 on a lease!!!! I should buy it. I'm also thinking maybe I should get it a couple years older and finance it with $10,000 down. Thoughts. I know this is a confusing post and I'm rambling out loud but hopefully somebody understand what I'm trying to say.
I feel like the 50,000 is also high but I just need opinions. I definitely don't think I'll be doing the lease but I need some smart financial help on the best way to do this. I have three kids in college and I have been driving the same car since 2006 and I really need a new one, but I need to make a smart decision. Your advice and help is much appreciated.

 

50k is high.

 

Do not lease! If you intend to keep it long term, figure out a way to buy.

If you are talking $50K for a TRD OR, that is not high, its about sticker.

 

Thank you both! I am particular on what I want in the car. I want a sunroof, I want the black interior with red stitching. I have been looking and the 2024 are going anywhere from $48k-65k ( all models) I am trying to get it for $48k but don't think the price is horrible. I hate the idea of leasing but the payment was so attractive. I would lease it while rates are higher but would never put the $10k down on a lease after thinking about it. I would be throwing $10k away when all is said and done. It's just so hard to grasp a higher payment so I am figuring out a way to buy and put more money down.
Do you think the 2023 value will go down once we hit 2024?

 

Your right on that 23s will go down due to stealerships wanting them gone because the 24s are out. But post 2020 market hasn't been "normal" sales practices. The big deals usually come in Dec due to yearly taxes on inventory, but that really hasn't been the case with the interest rates being so high.

So this is a situation if you can wait a bit longer for the interest rates to drop as some are projecting in 24, that's be best. I understand the wanting new, but needing new right now might be something you can hold out on.

But don't lease!

 

Leasing is the most expensive way to buy a car, don't do it. It rarely makes sense, and when it does it is usually as part of a compensation package from your employer where they are giving you a car allowance.

I can't think of a single reason I would lease in my own name.

You didn't mention if 50k was the out the door price, nor did you include the factory sticker price without dealer add ons. If that is a TRD off-road premium, and 50k is out the door including tax and all junk fees, it may not be a bad price. I just bought my 2023 TRD off-road premium in October with sunroof, premium package and MTM.

When it was all said and done it ended up being $1800 under MSRP plus tax and $200 dealer doc (junk) fees. It was somewhere right around $50,400 out the door but I don't have the paperwork in front of me.

 

Don’t leverage yourself that far for a car. Not worth it.

Find one that is 2-3 years old, save 15k, and use the banks money on the loan to pay for the car. Save your 10k and invest it. Never erode your capital. I’m in finance and grew up under a CEO. This is how we stay wealthy. Always preserve your capital.
Dust off the allure of the newest thing. Buy what you can afford or finance it in this case, then fix it up a little bit once you own it outright.

 

One thing many people forget about when looking at monthly payments is that with a lease, you really need to look at what happens after your first lease is up. Said another way, your monthly payment is artificially low on the first one because you had some equity ($10k in your case) to put down. When you go to lease the next one, you will have zero equity and your monthly payment will be significantly more.

As has already been said, if you're going to hang onto a vehicle for a long time, a lease is absolutely the wrong way to go about getting it. If you can't afford a particular monthly payment to buy a vehicle, I'd suggest that you really need to do some soul searching. Maybe you just can't afford as expensive of a vehicle as you want.

Oh, and just in case the dealership tries to extend the term of the loan (to reduce your payment) on a purchase option instead of a lease, that's another big red flag and easy trap to fall into. It's also the easiest way to end up "upside down in a loan." Never, never, never focus solely on the monthly payment when looking at getting a new or used car.

 

I definitely would not lease either. Although with a finance background also I sometimes disagree with the used option on a 4Runner anyway since the residual value is so good (they hold their value better than other vehicles). I would consider another SR5 or SR5P but pricing with certain packages can be close to the ORP.

I would try to find a lower priced trim you like and buy it and shop for best rate you can. You already said you have a 16 yo 4Runner right? Even with repairs compare that to what you will spend on just a 3 year lease and you know prices will continue to climb over the next 16 year period. Buying just makes more sense.

I just prefer new since I don’t like buying what could be a problem. I keep vehicles 20 plus years and the depreciation on them spread over that amount of time is negligible versus buying used in my opinion anyway. We all look at things differently. My advice find a 23 SR5 get a few grand off sticker and buy it with best rate you can find.

 

Glad you decided to not conduct the deal at the dealership for a lease. If you have never done a lease then you have a lot of homework to do.

1. Never put down any money on a lease that isn't required. Get into accident when you pull off lot you are out of $10k.

2. Money Factor - this is your interest rate in decimals. Need to understand it otherwise you are doomed on a deal. Plenty of lease calculators online.

3. Residual Value - Very important. Leasing company uses to calculate payments and if you decide to keep vehicle what you will pay at the end of lease.

4. Never play on their turf - do not go down to dealership before getting all this in writing and do all communication through email. When you have everything in writing then go down and test drive.

Buying a vehicle is best way to purchase a vehicle unless your company pays for it all at work. Otherwise, you have to baby it and responsible for all damage done to vehicle at end of lease. If leasing is your thing refer to my points above.

 

Much agreed. Buy it. Pay it off. Keep it for 20 years.

 

You also need to really weigh your needs vs. wants. Do you really need a new 4R? You've stated that you already own an '06 SR5. What's wrong with it? Are you just bored with it? Could you take the $10K you were going to put down and add some nice, exciting upgrades to the '06? Hell, I just intentionally bought a 2003 Tundra! It only had 87,000 miles on it. I plan to drive it until I can't drive. I also have a 2011 4R that I plan to do the same with. There's so much you can do with the money you would be spending on a car payment. Just some food for thought...

 

Well said!

 

Thank you for all the insight everybody. I am not as dumb as I may have sounded. I totally was not thinking when the leasing option was offered. I didn't even catch the fact that the $10k that was my down payment for a loan then went towards the lease until I left and I knew I would not be doing that.
I love my 4 runner and have been waiting for a few years to buy another. My husband will be driving my 06 as a commuter when I get a new one. He drives a GMC now and it's worse on gas. I can afford a new car with the payment but it's been so long since I bought a car so having a payment again will suck. The rates are high so it makes the payments even higher. I wouldn't buy something I can't afford. I am pretty set on the exact vehicle I want but was going back and forth between SR5P or TRDP but really liked the TRDP when all was said and done. I left knowing I let my excitement get the best of me. I will be putting more down to make my payments better. Thanks for all your help. So much appreciated.

 

That was another good point on the $10k down payment idea above. So many don’t realize if you down cash on a lease then two weeks later the vehicle is totaled in accident you’re most likely not getting that $10k back. You have to pay the contractual residual value you agreed to on the vehicle. So always always put the minimum amount of cash down the vehicle.

Count your blessings Danielle is my advice. I am in the opposite situation no spouse myself, no kids, and pushing 50. I have extra money as result and consider buying an extra 4Runner or Tacoma as V6s go away. I don’t need anything I get bored and already have a few vehicles. My point is love your kids, your husband this holiday season and give thanks for what you have. In the long run the emotions of the vehicles wear off but not a loving family. Happy New Year

 

If you go on Truecar.com you can find the 4R you want at a true price. I’ve used it before. Look for a dealer that doesn’t charge a markup. Toyotathon is on right now so hope you find a good deal.

 

I feel your pain.
Just picked up a 22 SR5 Premium for $35.5K with 42k miles. This was $1k off of sticker. All the other used dealer cars I could find were about $5k more, or slightly less but with $2500+ NON-NEGOTIABLE BS fees like Nitrogen tires or a second 3rd brake light or a tracker.
It was an ex-rental from WA State, with zero rust. I spent an hour in the lot looking at the underside very closely. Before this one, I found several at various dealers that were rentals from Michigan and West Virginia; prime rust belt areas - beware.
As it was a rental, I paid about $200 for a Toyo dealer pre-purchase inspection (which came back with zero issues), and negotiated a 100k mile 5-year bumper to bumper warranty. OTD at $42k including extended warranty, title, registration, doc fees, and a galling 8.7% sales tax.
While a new one was "only" about another $10k, I'm 69YO; while this will be the last car I drive, and increasing the resell value to my heirs by purchasing new was not on my priority list. I'd rather do something fun with that $10k, instead of looking at a newer car sitting in the garage...

Options I considered/looked at:
Many 2018-2020, with a lot higher miles (75-100k) for $30k-$35k.
Salvage 2018-2022 with low miles (20-30k) for $30-35k.
2010-2015 150k to 200k miles for $20-$25k. No disrespect meant, but...
I did not find a private party sale better than a Dealer's. That said, call me paranoid, but I also had some...concerns about a private party sale for $40k-ish. It does not take a lot of googling to find horror stories of purchases gone bad due to sellers of nefarious intent - false Car Faxes, flooded or damaged vehicles being sold with a clean title, or even fake VIN numbers. At least with a dealer you know where they actually live... BTW, if you are caught with a vehicle with a false VIN, the police confiscate the car. Period. You.are.screwed. Your only recourse would be the folks you gave the cash to, and whom may or may not be easy to find.

This was the best compromise I could find between new and Private Party sales wanting almost new prices with 30k+ miles. Seems more than a few folks think their 1-2 year old 4R's are worth 95% of a new one.
I spent a couple months looking around; heck, it took me a month to reconcile myself to spending 25% the price of my house on a car!

The only thing I did/do not like was the sun roof. Living in AZ and having several skin lesions treated on face and arms, a factory provided "radiation entry hole" in the roof is not a selling feature; it's a bug. So I keep the lid closed, but at some time the seals will fail, and then I will have to spend $ to fix something I did not even want...

Good luck. Today 12/31 might be a really good time to walk into a dealer and get a good deal.

 

Welcome.

First thing to do is not “payment shop” while at the dealer. You can easily use a reverse auto loan calculator to figure out what you can afford. There are many dealers that will sell you a non-Pro trim 4Runner at invoice. Knowing what state you’re in will help with people being able to refer you to dealers that won’t take advantage of you.

 

Just keep shopping.

2020 and newer 4runners are pretty much the same. Maybe look for a very nice used 4runner, interest rates might be a little higher though.

 

ugh dealers!

If your current vehicle is in good shape or is in good shape save for a couple thousand in repairs and/or maintenance I vote to hang onto it. You'll lose the option to use 4WD on pavement if you upgrade to a 5th gen too. (it's Limited only now)

Anyways, I think peeps have covered your bases pretty well already. All I'd add is that dealers vary widely in that some will require their add-ons, some say no add-ons but then say accessories like that $200 trunk organizer are mandatory. When pricing it out, make sure you account for tax, destination, titling/documentation fees to get a good idea what to expect to pay out-the-door. I went in to a dealer to ask for high-40's out the door on an SR5 and it got switched around to low-50's before tax in conversation before I caught on.

We also can't really predict what 5th gen value will necessarily be as it's not about what you feel is better but more about what the overall market feels. (and for example in normal cars, the market sure likes big wheels with smaller tires!) We also don't know anything about what the 6th gen will look like. Plenty of guesses jockeying for your views but we can only guess. (maybe gas only to not step on the LC's or GX's toes? or maybe hybrid + smaller to hit fuel economy targets, etc.)

I went for a couple year old, lower mile 4Runner used from CarMax. Note that the majority of models floating around used seem to be ex-rentals for better or for worse. (at least as of last fall)

 

The only thing I will add is that you'd have to be nuckingfutz to finance a new car right now. Wait until rates come down. Prices will fall too. The dealers aren't hungry yet. They will be.

 

I hope you’re right but Toyota broke all sales records in November. I don’t look for prices to fall. And I doubt interest rates will come down anytime soon as this will be an extremely volatile year, at least in the U.S.

 

I know I’m new to the forum but I did my research for a while and got my 23 ORP for just over $51k. I think you can do better on an SR5 than $50k. I don’t know where you live but I spoke to 5 dealers before I settled on the only one who was willing to do the deal for MSRP, no mark up. If it’s still too much $ for your comfort then go used. Search on Auto Tempest, it’ll give you nationwide options. Good luck.

 

I know for a fact that Family Toyota of Burleson outside of Dallas, TX is doing like 4500$ off MSRP right now. Just got an email yesterday. They are honest, Christian people and family owned. Only dealer in Dallas that doesn’t mark up.

 

Here’s a 2023 SR5 I found with a quick Autotempest search. It’s a CPO low miles with a 100k warranty.

https://www.cars.com/vehicledetail/...=atempest4&utm_campaign_id=2&utm_trusted=TRUE

 

I used to live in DFW and it drove me nuts how many Toyota dealers charge thousands over sticker for addons and would refuse to budge on it.

 

If RWD is ok…

 

Keep looking. It pays to arrange your own financing. I belong to a credit union, and their rate is 6.24%.

I started looking for a Limited in May. New was out of the question, and so was leasing. 3 weeks ago, I found a 2023 with 5100 miles for 48. 6 days later, they dropped it to 46.
I had a little more than 10k to put down, and a 2005 Astro 5 passenger van (one of the nicest, original ones around). 6 1/2 hours after arriving at the dealership, I was on the way home with it. They really wanted to sell it.

 

I’m just an ordinary guy who has mostly owned old vehicles and worked on them, myself. I don’t borrow money to buy cars. When my kids graduated from university and got out on their own, I saved some money and bought one of my first new vehicles, a Tacoma. Right after I bought it, I started saving for the next one. Sometimes I had to skip a saving deposit because of an emergency, but I kept going. 5 years later, I sold the Tacoma, and bought a new 4 Runner ORP. I bought it off the lot at a Toyota Red Tag Sale end of year clearance event. I still have it, it’s the best car I’ve ever owned. It’s 5 years old now, and I’m thinking I might sell it eventually and get a 6th Gen 4 Runner or maybe a new Land Cruiser. Not sure, though. The point of my story, is that you can save your $ and pay cash for a car. When you look at the cost of the car + interest, it’s an expensive purchase. It’s amazing how easy it is to save to buy a new Toyota if you have a good old one to sell too. I’ve always received a premium price for my well cared Toyota 4x4s, even the old ones that I had to fix up to keep running.

 

It's that immediate gratification thing. Most people don't have the patience or discipline to actively save for ANYTHING these days. It also seems that an ever growing portion of the population don't give a shit about credit or credit ratings, and do little to protect or improve them. There are too many shady lenders who are willing to underwrite a loan, albeit at exorbitant rates, to people who have no business purchasing anything on credit, much less a $50,000 vehicle. Repos are on the rise nationwide. Point being, with a little patience and discipline, there are going to be really good deals coming soon. Sir, you've got the right mentality. However, if it were me, I wouldn't mess the the 6th Gen 4R just yet. Give it a little run time. The 200 Series Land Cruiser is destined to become, and already is a highly sought after classic. I wouldn't mess with the 300 Series just yet. Time will tell on both.