Here’s the latest reader question, along with my reply!
Greg writes: My lease for a 2019 Tacoma TRD Pro runs out in February. I was going to buy it out because of the value of the vehicle in today’s used car market. The dealer called me this week and said they just got the one vehicle I told them I would trade the truck in for, a 2020 Land Cruiser Heritage edition. They offered me $45,500 for the Tacoma and $92,900 for the Land Cruiser. The land cruiser has 22,000 miles on it and in really good condition. I’m guessing both vehicles will continue to hold value pretty well over the next few years with inflation and chip shortages. Is this a good deal? If I’m trading in a car from a lease (I have to pay off about $34,000), does that mean only about 11k goes towards the purchase of the new vehicle? Thank you for always being candid and prompt in your responses.
My reply: The sticker price for the ’20 Land Cruiser Heritage Edition when new was $87,545 – so the quoted asking price of $92,900 for one of those almost two years old and with 22,000 miles on it is pretty haltingly exorbitant. But it’s not surprising to me, given the way the value of used vehicles – especially SUVs and pick-ups – has inflated over the past year or so.
My humble little ’02 Nissan Frontier pick-up, for instance, would cost me about $8,000 to replace today, if I could find one. I paid $7,500 for this truck twelve years ago!
The reasons why are manifold but chiefly – I think – because awareness is dawning that everything new is both over-teched and over-priced as well as far more disposable. Both the vehicles you reference – and my truck, too – are vehicles that can and likely will last for another 15-20 years and perhaps get us through this mess.
As regards your dilemma:
Your lease contract should have a stated residual value/buyout amount listed. This is what you would have to pay to own the vehicle once the lease period has expired. This is usually established at the time of lease inception – which is a damned good thing, in your case, if you decide you want to buy the Taco, because the stated buyout value is likely far lower than the current market value of the Taco.
Assuming it is – and the way to know is to compare what the buyout sum is vs. the current retail value of a ’19 Taco with the miles/options and so on this one has (see NADA and Kelley used vehicle pricing guides). My bet is it would be a better deal for you to buy the Taco – unless the dealer discounts the price of the Land Cruiser sufficiently to compensate for the money you are likely to lose if you give up/trade them the Taco for whatever the stated residual value/buyout amount is per your lease contract.
It’s generally sound to consider one transaction at a time, so as to avoid the ol’ bait and switch.
Given the crazy market for used pick-ups/SUVs right now, I think you are in the catbird seat with the Taco you’ve got . . . and are likely be in the hot seat, if you try to buy the Land Cruiser, right now.
. . .
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