Will 2021 LC hold value?

[PDoyle]

You could always take a step down into an LX.
Just received an email from Lexus today....

SELECT 2020 LX STYLES
0.0%
APR
FINANCING UP TO
60
MOS.
Expires 01/04/2021. 60 Monthly Payments of $16.67 per $1,000 Financed.

 

[04UZJ100]

You could always take a step down into an LX.
Just received an email from Lexus today....

SELECT 2020 LX STYLES
0.0%
APR
FINANCING UP TO
60
MOS.
Expires 01/04/2021. 60 Monthly Payments of $16.67 per $1,000 Financed.

My folks just picked up a fully loaded LX for $89k cash. Sticker was over $100.

 

[40Man]

If someone is financing with interest a depreciating asset such as a vehicle, it is a double hit on ROI. Mathematically it never makes sense to purchase (especially financing) a quickly depreciating asset unless the need or IT factor outweights than the $$. If the the OP would enjoy at 2016 or even a higher mileage 2013 as much as brand new, then easy decision to make, save the rest of the $$ for other fun/necessary things. If the joy of owning brand new outweights the depreciation, then that road seems to be there too. I was in the same boat and bought a 2013 with 50K miles with no financing and never looked back.

While I get your point, knee jerk reactions like this can actually cost you a lot. It is one thing to finance a car because you can't afford it, and pay interest from your monthly paycheck. It is a whole other thing, when you have the cash to purchase a vehicle like you did, when the investment opportunity for your cash could vastly outweigh the cost of financing, especially in today's market.


The average investment ROR from 1923 (the year of the S&P's inception) through 2016 is 12.25%.

For me, since 2009, my ROR is closer to 19% per year on the stock market, and closer to 25% on real estate. I financed my 2020 4Runner at 1.9% and my 2016 Land Cruiser at 2.9%. If I took out investment cash to pay for them, based on averages, I'd lose a lot of money.

How much? Based on an 11% stock market rate of return, and a weighted 2.5% on my car loans, I'd lose right around $25,000 in investment income by paying for my cars in cash. That 25,000 invested for 25 years will give me an end balance of $215,000.

Now, over a 5 year blip, the return could be lower or higher than 11%, but if you spend your lifetime with this investment planning structure in mind, the savings will come to fruition based on past performance.

The other benefit I have is I continue to put 15% into investments, and maximize my Roth 401(k) regardless of what I spend on vehicles, etc. If I want something that would put my savings under that threshold, I don't buy it.

When I get closer to retiring, and start investing in lower return funds, then I'll reevaluate. Same goes if the interest rates on loans skyrocket.

 

[PDoyle]

Loans suck!

 

[geddon01]

Investment vs Opportunity

One owner vehicles hold value better than non. But I agree, vehicle and investment should not be used in the same sentence, however there are exceptions.

The opportunity is to buy brand new, never owned LC, which this might be the last opportunity to do that. If you bought a new one in the past and kept the truck then you are in the same group. Some missed that boat by choice and others by financial constraints.

My vote is if you can buy new now, do it. If not then no worries, plenty of amazing used truck out there that will last a lifetime.

exactly why I bought my 2021. Last chance to get the dream truck new. I don’t expect any special treatment on the depreciation front.

 

[Chrisleduc1]

Buying a new LC seems like a really bad idea. When I look at them used, they are losing about $10k/yr in value for the first 5+ years. I

Three pages of comments, I must be the only idiot.
Can you please point me to a 4 year old LC that is 40k less than a 2021 or a 5 year old one for 50k less than a new one! I’ll probably buy two at that price point!! That’s 30k for a 2016!

 

[fogby]

For me, since 2009, my ROR is closer to 19% per year on the stock market, and closer to 25% on real estate. I financed my 2020 4Runner at 1.9% and my 2016 Land Cruiser at 2.9%. If I took out investment cash to pay for them, based on averages, I'd lose a lot of money.

Where are you investing in real estate that has returned 25% a year for for a 12 year period (12 years includes 2009)? That'd mean a $100k investment would now be worth $1.6 million.

 

[bloc]

Three pages of comments, I must be the only idiot.
Can you please point me to a 4 year old LC that is 40k less than a 2021 or a 5 year old one for 50k less than a new one! I’ll probably buy two at that price point!! That’s 30k for a 2016!

Exactly what I was thinking. I get their point but the numbers are a bit off here.

 

[40Man]

Where are you investing in real estate that has returned 25% a year for for a 12 year period (12 years includes 2009)? That'd mean a $100k investment would now be worth $1.6 million.

Actual average return has been 23.9%. The prior decade was also good, but closer to 11%. Based on lease returns and a couple insane buyouts of a few key properties and investment in a lot of depressed properties in 2009. The return is not sustainable long-term. I fear once I see the 2020 results a lot of that will be lost.

 

[scottm]

Three pages of comments, I must be the only idiot.
Can you please point me to a 4 year old LC that is 40k less than a 2021 or a 5 year old one for 50k less than a new one! I’ll probably buy two at that price point!! That’s 30k for a 2016!

I've been pricing them for a while. 2020 LC out-the-door prices are close to what I'm quoted for this 2021: $89k. 2016 LC are selling for $50k-$55k. By my math that's approx $10k/yr. Low mileage 2016 are selling for high 50s, I'm leaning toward that option. Could swing a 2021, but there are a lot of mods I could buy for the price difference.

 

[684cruiser]

I have been a member for a while, I really love LC’s and I try to convince my wife to trade her brand new 2020 RX350 for a LC or LX. I have a paid off tundra which I’m keeping forever and I want 2 vehicles that can tow an airstream we plan on buying. We are happy with what we have, even though we have about $50k in savings and I know I can afford a LC, I’m being patient. By the time I am ready I’m sure there’ll be some good used LC’s around, buy used and save money. Having money in your pocket feels much better than that dream car, but I get that feeling too.

 

[krice118]

I think it’s less than $10kbper year. If I recall, those 2016s were selling for $72-74kbwhen new

 

[eatSleepWoof]

The counterpoint to that would be if the buyer has the cash to buy it, but does financing instead. Then invest the cash. You might be paying around 2% APR on the depreciating asset for a few years, but at least you're getting 10+% compound interest on the cash you invested, forever. It's a better deal than just buying straight up with cash.

EDIT: But yes, I agree that the joy can outweigh the depreciation!

Very much agree with the premise, but I'd love to know where one gets 10% ROI year after year, forever. Hook a brotha up, eh!

 

[vegasfj40]

I think it’s less than $10kbper year. If I recall, those 2016s were selling for $72-74kbwhen new

I know that out here in the west, I can probably get 75k for my 21 in a couple of years. Mileage will still be low. That's a drop of about 7k a year. 16s are now 5 years old. They're usually around mid 50s to 60k now. That's about 6k a year drop from new.

 

[FerrisBueller]

Very much agree with the premise, but I'd love to know where one gets 10% ROI year after year, forever. Hook a brotha up, eh!

There are many mutual fund options that have provided (on average) more than 10% per year return for decades. Even picking a fund that follows a mix similar to S&P 500 / Dow Jones / Nasdaq will give a generally decent return. The key is looking at the long term and having patience through the ups and downs (and investing more when things drop, like earlier this year)

(Disclaimer: I am not a financial advisor, just an LC enthusiast)

 

[stonepa]

I have been a member for a while, I really love LC’s and I try to convince my wife to trade her brand new 2020 RX350 for a LC or LX. I have a paid off tundra which I’m keeping forever and I want 2 vehicles that can tow an airstream we plan on buying. We are happy with what we have, even though we have about $50k in savings and I know I can afford a LC, I’m being patient. By the time I am ready I’m sure there’ll be some good used LC’s around, buy used and save money. Having money in your pocket feels much better than that dream car, but I get that feeling too.

Wait - you have $50k in savings, a loan on a new RX, and you want to sink even more into an LC? Your money but that is money i wouldn’t spend on another dang vehicle, especially with the economy teatering on the edge as it is right now.

 

[684cruiser]

@stonepa dont worry I’m not doing it, even though our only debt is my wife’s car we can afford an LX or LC if we trade my wife’s RX. But I know it’s financially responsible to wait, I would have done it already if I wasn’t as wise as I am now. But we’re happy with what we have and we make what we have work.

 

[CharlieS]

If you are going to buy new, contact member @Eric Sarjeant - he will give you a super fair price. Like shockingly fair. And he's legit. Solid dude that will take care of you.

 

[itrsteve]

I’m also very conscious of depreciation BUT do value the idea of a possession being “mine” from day one... vehicles, guns, rolexes, etc.

So this was something to weigh through when buying a 200. Ultimately the “lightly used” route of a 2 year old vehicle with $20k shaved off the top seemed to strike a good balance for me.

There’s not a wrong answer for buying one of these, just a few different approaches.

 

[Crush 4]

If you are going to buy new, contact member @Eric Sarjeant - he will give you a super fair price. Like shockingly fair. And he's legit. Solid dude that will take care of you.

There was a time when buying a house was an investment. Then 08/09 happened. One could argue, depending on where you live in the country, housing may still not be a great investment considering interest paid, taxes, repairs etc.. you have to live somewhere but what do you really need?
I grew up in a 1,000 sq ft house with my 3 brothers and it was awesome. I have been fortunate to live in a nicer home now. Both have created memories and Value.

VALUE doesn’t have to be measured in terms of money or appreciation. Value can be the joy and memories you create by the things you do and have. We came into this world with nothing and we are going out with nothing.

Buy responsibly the vehicle or whatever it is that can bring you joy, memories and lots of fun. My new cruiser is going to take me and my wife to places I have never been and create memories that will last a lifetime. That is certainly worth a little depreciation .

LIVE IT UP!