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I have a 92 Camry - it's been awesome 240 000 km on it now. Was going to definitely buy a 1997-2002 used Camry until I read about the oil sludge issue.
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What trud said, it depends whether the person took care of the car or not. The Camry engines have some unique design considerations involving the PCV system and also, at the time these cars were sold - Toyota recommended an oil change interval that was way too long, like over 7000 miles or something ridiculous.
I had bought TWO Toyotas, a 01 solara and my 02 Camry, both with V6 and did not know anything about this sludging problem at the time. But i have had no problems with either of them so i assume the previous owners just changed the oil. Both these cars are fantastic and wouldnt trade either of em for anything except maybe a Lexus, but like you, if i had known about the sludging issue, it might have made me think twice.
The upshot is, i wouldnt let this issue prevent me from buying a camry again. although i think if i did buy another one, from a dealer, i might make him pull a valve cover so i could look or allow him to let me do it so i could make sure this engine is not sludged up. But i am just anal sometimes.
If you know the cars history, or even if you dont and it runs well - chances are if you buy a camry of this gen you will be fine. At WORST you might just have to buy something like Auto-rx and let it desludge but lust like TuRD said i believe this engine is just like any other engine, if the oil aint changed, it is going to mess it up.
Go ahead and buy a camry. Your chances of a sludging problem are very slight.