If you had said BMW or Range Rover, then my answer would be yes. But you have one of the best, most reliable, very economical (overall cost of ownership) models of personal transport that the world has ever seen. And the no-frills base model at that.
Yes, you *may* come out slightly ahead trading down to a $4,000 used car and essentially arbitraging the difference. In other words, you may have 200,000 miles of remaining useful life on the Camry, or 50,000 miles left on the hypothetical $4k car you would buy to replace it. You're wondering if you should make a bet that in the next few years, your invested ROI on the $7k difference is better than keeping all that capital stored in future useful service life on the Camry. Maybe.
My issue right now with used cars is that I think they're grossly overpriced, and by that I mean their depreciation is nearly linear, which I find absurd. In other words, if a hypothetical car has a useful service life of 200,000 miles and costs $20k new, then the used market is pricing the same car (if it's a Toyota/Honda) used with 100,000 miles on the odometer for $10,0000 (approximately). The old "it loses half its value the second you drive it off the lot is simply not true." So my strategy is to buy new and drive into the ground.
And that brings me to another point--information asymmetry. Since you've owned your Camry since its "birth," you know exactly how well it's been treated and maintained. Any potential buyer of your car has no gurantee of this information, so the market generally demands that he be compensated for this lack of information by a slightly lower price (I know this is in contrast to my previous point, but I think it's still valid). Furthermore, when you buy your $4k used car, you have no guarantee about how well that car has been maintained. The problem here is that if you're a gentle driver and responsible about routine maintenance, on average you're going to cede some ground here in used car transactions.
My vote is to keep what you've got. It's got a long life ahead of it, and you don't have the concern that the transmission is about to fail like you would with any $4k car.
Realistically, your best, most likely, most practical, most definitive option is to RIGHT NOW, TODAY (if you haven't done so already), set up an automatic monthly transfer of whatever money you were paying toward the loan into some sort of investment account. In a way, that's the same thing as dollar-cost-averaging into the market the very same capital you're wondering about now.
