Depreciation question.

So when I was younger I had a paid off tacoma. I was stupid and sold it for a jeep and then a dodge and the dodge had a salvage title. The dealership was very sneaky with this and I didn't know any better (was on my own and had nobody to teach me). I ended up loosing my butt on it and traded it in on a 2015 tacoma AC 4x4. Base price 24000. In a year I should be right around owing 24000 on it. My question is at that point how far off will I be from being right side up? Do the 4 cyl loose there value more then the v6? I want to be right side up and am kicking myself in the butt.

 

They hold their value quite a bit. 4cyl might depreciate a little more but not much.

 

There are a lot of variables, but typically on a 5 year loan you break even in year 3. However, it all depends. I had a Chrysler where I was still upside down after 4 years because it depreciated faster than I was paying on it, and on my Tacoma I got a great deal so I was basically in the green from the beginning.
With you starting deep in the red and knowing the Tacoma's reputation I would say somewhere in year 3 of you payments, if you keep it in good shape and relative low mileage.

 

My game plan was to get into a car that holds its value. I hope its sooner than 3 years.

 

For me, buying my taco or any vehicle isn't so much about staying ahead of vehicle depreciation. As long as it does not crap on me half way toward paying it off, it's all good.

 

The main thing is, don't trade again. Your situation will repair itself with every payment you make, because I can tell you for certain that you will be right side up when you mail off the last payment on your current truck.

Every time you trade you shovel thousands of dollars into a dealer's bank account and out of yours - and I am not talking about the sticker price of the vehicle but everything they make money off of: your trade-in, the fees they collect on your loan, etc. That's all blurred because most people just look at the payment. The moment you'll be right side up really doesn't matter because the smart financial move is to hold on to it well past that point. Then when you get it paid off you can start enjoying life without payments, which you might grow to like. That little truck in the picture next to my name is the one I bought because I had the money to pay for it.

 

You make great points and I don't look at the payments but the total amount financed. I got a 2% rate from my bank so that helps. Being in the military we are tax exempt in the state I'm stationed so the only fee I paid was document fees. I have payed off all debt except for the truck so I'm throwing huge chunks at it but it will still take some time.

I see soldiers screwed all the time because the dealer says your payment is only x amount but they don't realize they financed for 7 years and they pay 20% and up in interest.

 

This was another reason I sold the dodge that thing took a huge crap a few months after owning it and hence why i was almost 7k in the negative.

Poor decisions led me to where I am but I have learned my lesson. I miss my paid of tacoma every day.

 

I don't know if anyone mentioned this or not.....The only way you're gonna get closer to "loan to value" is you need to start paying extra $$ each month towards the principle.

You'll save time and money by doing that!!

 

Soldiers and lots of other people get screwed that way, by high interest and letting dealers drag out the payments forever because it makes a lower payment. You're obviously doing the right stuff though so that's not you by any means. At two percent it's a great interest rate so it's a toss up as to whether you should pay extra on the loan or just put your extra money into savings and pay the loan as scheduled. Either way you'd do fine.

Congratulations on your truck and thank you for serving our country.

 

It's a vehicle, not an investment. Buy it, drive it, maintain it - keep it for the long run.

Swapping vehicles every few years is very expensive compared to owning and maintaining one for many years.

 

Im definitely paying towards the principle.

Another thing I see happen to soldiers and happened to one of mine is they get complex interest loans and I've seen them struggle. It crooked what dealers do to the soldiers around here. I think they prey on them since there fresh out of high school and have a steady income and no mom or dad to tell them no or that its a bad idea.

 

Play stupid games, win stupid prizes.

I always crack up when the most expensive vehicle in the parking lot belongs to an E-4, and there are dozens of O-3, O-4, and O-5 working in the same building.

 

Its very true. I bought a 2015 but lived within my means. I had no other debt and got a base model. My soldier has a 50 thousand dollar truck and he's an E-4. He seems to be doing fine though so its not my place to say he can't have one. But I can't imagine he has a lot of money at the end of his payments.....

 

I am sure it is true that they prey on soldiers. I see a lot of places around bases there are lots of dealers that advertise specifically to the military clientele because they know there's a steady paycheck there.

The thing about paying in advance on a 2 percent loan is you have to factor in what you know about yourself. If you think you will spend the extra money on non-essential purchases if you do not pay it toward the truck, then by all means make extra payments when you can. But if you could instead save the extra money as an emergency fund then that could possibly keep you from having to go into more costly debt if you had an unexpected expense. (A credit card at 15 to 20 percent is a lot worse deal than a truck loan at 2 percent.) Just something to think about.

 

Me an my wife have an emergency savings. We both paid off and threw away the credit cards. Those suckers will get you in debt fast. Especialy being Newley weds but the military gave us a Dave Ramsey seminar wich helped some.

Still didn't stop me from buying a new truck but I thought it would be the best financial decision since tacomas hold there value more than other vehicles. My 03 ore runner had 170k on the odo and I sold it for 8500 it was in pretty rough shape too since it was a work truck.

 

Pay it off early.

Whatever it takes. Skipping 'luxuries' etc. etc. Dump more principal every month into it.

Plan on keeping it long term, maintain it well, but avoid the itch for modification spending. Let it do what it needs to do stock.

When paid off, take what you made as the basic payment and set up an account, and pay yourself. When time comes for another (maybe not new) vehicle you'll have a pile of cash and a paid for truck.

Sell the paid for truck on your own; you'll never get as much in trade. What they 'give' you in trade allowance is NOT what they are paying you for the vehicle.

Don't blame the dealer, the military, your parents or anything else for your decision. You signed the papers, it's all on you. There was no reason you could not walk away and do the research needed to make a better choice. While I agree the dealer may take advantage, they can only take advantage of those who let them do it. They can't force you to do anything.

Hopefully you can get things turned around, help others by sharing your hard earned knowledge and avoid such an experience in the future.

Thank you for your service!

 

Couldn't that just be becuse they is the big employer in the area and for that reason they are "preyed" upon?

 

Theres just as many civilians as there is soldiers. But the younger soldiers become the prey since they've never heard the term interest or know what a credit score is. The dealers use this to there advantage and tell them they will not get any better than a 20% and tell them this is a great rate for someone with no credit, making the soldier believe that its an outstanding deal and they should act quickly.

If you have ever driven down a main road outside a military base every half a mile theres a car lot waiting for that new joe to come in.