02-13-2020, 11:13 PM | #1 |
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I'm waiting to order a 2021 fully loaded $122k come August but keep feeling the gut punch of looking at how BMWs lose value. Obviously most all vehicles stink at this but when doing my research on X5s (since no history yet with X7) the numbers are abysmal. Literally 50% of MSRP lost after 2 years. That's killer. That's like $2500/month for the first two years. I make good money and I really like the X7 but I really feel stupid losing that much on a purchase so soon or paying $60k in 3 years to lease. I guess just the price to pay to own a new BMW. Anyone else struggle with this or just me?
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02-13-2020, 11:33 PM | #2 | |
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it comes with good reason. Most default manufacturers warranty only covers 4-5 years maximum. Repair and maintenance costs for any car in year 5 will equal or exceed years 1-4 combined. most cars need new tires, brakes, fluids, etc at the 4-5 year mark. Also supply and demand. everyone wants to buy a new car. Hypothetically, if money was no object, few would choose to buy a 4 or 5 year old used car. cars off lease at year 3 flood the markets. Thus, the price of cars years 1-3 is high; years 3-6 is lower. In general, if you buy new and sell after 6 years; or you lease two 3 year back to back; it costs roughly the same equally. So do what most BMW and Mercedes owners do, lease them. Three year or thirty six month lease and move on. |
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02-13-2020, 11:42 PM | #3 |
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I hear you, but your post is confusing. If you're concerned about resale value or depreciation why would you buy a new car? When I've bought new in the past, I knew I was going to eat the depreciation cost as soon as I drove it off the lot. It was almost ceremonious - but I was comfortable with it. That was when I was buying a car for $40k...$122k is different.
When I was shopping for my X7, I was in the same boat. I was ok taking a new 40i off the lot, but not sure I would've felt the same with a loaded M50i (or even an XDrive 50i). That left me with a decision that unfortunately was somewhat out of my control, based what used X7s were available in my area. When I was ready to pull the trigger, my decision came down to choosing between the new 40i and a 2019 lemon-titled 50i with low miles. For resale value alone I decided the new 40i was my best option. However last minute a used 2020 M50i popped up with 2,500 miles on it -- but $25k below MSRP. I jumped on it. Long story short -- if you're concerned enough about resale value and deprecation that you're posting this question, don't buy a new car. My guess is that you're going to start seeing a lot more used/low mileage X7s show up in your searches over the next couple months. It may not be exactly what you built on the website, but I'm sure you'll be happy with it. And you'll feel better about not taking the steep depreciation hit. |
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02-14-2020, 05:42 AM | #4 | |
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02-14-2020, 06:04 AM | #5 |
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At that price-point, your answer is clear: It's called LEASING.
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02-14-2020, 07:46 AM | #6 |
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Or, you can take a different approach... Buy new with the intent to keep the car for the long haul, like 7-8+ years and 100k+ miles. That way the depreciation hit is mitigated by the fact you will own the car without a car payment for a significant period of time, using that would be car payment (or lease payment) to go towards something else. This thought process works even better from a saving $$ standpoint if you buy a gently used car and keep it for the long haul. Of course, this only works if you are the type that doesn't "need" a new car every 2-3 yrs AND you have a car that has good reliability after the new car warranty period (which means fewer automotive expenses in the later years of ownership). Despite what some people think, some BMW models can be very reliable after the new car warranty period. It just takes a little bit of extra work prior to and after your purchase - something many car consumers don't do.
This methodology has worked well for me. For example, I bought my wife a 2005 X3 new back in '05, paid it off in under 5 years, kept if for a total of 10+ years and 150k miles. I specifically chose the 28i model (over the bigger engine at the time) as the 28i engine was essentially "bulletproof", along with the transmission. The only post warranty work I did in the car was basic stuff like tires, wipers, routine oil changes (including the transmission, diff, etc), spark plugs, etc., and I swapped out the shocks at the 80k mile point. The amount of $$ I spent to maintain it after it was paid off was significantly less than new car payments would have been (further helped since I DIY a lot of the work). I did the same thing with my current SUV (2007 Ford Expedition EL), except I bought it used (2yrs old) with 25k miles for $24k (new was $50k+ sticker). Now, 10+ yrs later at 136k+ miles, it has similarly treated me well from a $$ maintenance perspective and I am ready for a replacement SUV - a new X7. The X7 is still a very new model of course - with untested reliability. And like what was previously mentioned, it will take a large depreciation hit (and "flagship" models of any brand seem to take larger than average depreciation hits - look at the 7-series for example). However for me, this is why I am carefully choosing the options on the X7 I intend to keep for a while. For example I like the 40i over the 50i/M50i as the 6-cyl B58 engine in the 40i has a much better reliability track record over the 8-cyl N63 in the 50i/M50i (and the 40i has enough power for me, even though the 50i is definitely more "fun" in the power department). I am also staying away from the DHP package too. The "tech" in the DHP package is cool, but more "complex" than tradition suspension tech and I have concerns of reliability and repair costs after the warranty period (and the option does not really interest me anyway). At the end of the day, it is all about what you feel comfortable with. You have worked hard for the $$ to be able to comfortably afford a luxury vehicle like the X7. So just determine the best financial method that works for you and your lifestyle, then get the car and enjoy it. IMHO, it is foolish to look at a car purchase (new or used) like you would an investment - it will just detract from the enjoyment. Just get what you can comfortably afford (lease or buy, new or used), enjoy it, and replace it when you can comfortably afford to do so AND you are ready for something new.
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02-14-2020, 08:29 AM | #7 |
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I think what you are struggling with is that it’s hard to compare financially the enjoyment of driving the car you want vs. a cheaper car. Is extra $1K a month worth it to lease an X7 vs. Honda Civic. If we all could convert the emotional enjoyment to $s we would be able to make our purchasing decisions more logical. I like leasing because it gives me more flexibility and also because with low interest rates you come out the same or better (both financially and emotionally) with leasing vs. owning a car for 5-6 years as you get a new car every three years with the new technology and toys.
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02-14-2020, 09:58 AM | #8 |
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Lease perpetually.
Start your leasing life with the X7, never buy another car again. Works out well this way. No hassles, no private sales, no trade-in ripoffs, no maintenance expense, no repair expense, no more trips to DMV for the rest of your life. Always in a brand new car, if you lease 2 cars and arrange it properly your family gets a new car to enjoy every 18 months. Your car isn't some investment worthy of purchase. It's a monthly utility, no different than your electric bill or your phone bill. You need heat, you need cellular, you need transportation. Lease what your monthly budget allows and never give a second thought about financing again. |
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02-14-2020, 10:07 AM | #9 |
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I think it's reasonable to struggle with this. But just remember — the only thing that determines something's value is what someone is willing to pay for it. With luxury items like the X7 that are relatively plentiful and easy to buy new, for many who have enough money to spend (and can stomach spending) big bucks on a slightly used car probably have enough to just buy a new one.
The fact that you want a new BMW instead of a used one makes one less buyer for the used one, adding to the greater lost value of the vehicle in the first place. |
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02-14-2020, 10:27 AM | #10 | |
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02-14-2020, 10:27 AM | #11 |
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I struggled with this for sure and I pretty much agree with everyone's response above. I bought the Macan CPO because it was only a few months old and the price reflected the initial depreciation. I plan to use it as a DD until the warranty is up (almost 6 years). The X7 I leased because it's a new model with unproven long-term reliability and 47% depreciation over 3 years (12k/yr) is something I can live with.
Lastly, one thing I'll add is depending on your source of income, which from your name I'm taking a guess at your profession, you may be able to use the Section 179 deduction to buy it outright and expense the purchase. I considered this but wound up leasing it because $4k of the incentives was through financing with BMWFS. I was ok taking a chance buying as my BMW dealer has been pretty good with warranty stuff and my GEICO policy includes mechanical breakdown insurance for 7 years! I've never used it but my friend's MB transmission was covered by GEICO after his new car warranty expired. As always, speak to your accountant to verify.
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02-14-2020, 10:39 AM | #12 |
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Expensive car will be expensive if you lease or buy. Does anybody really need a $122K X7 50i? No of course, but if you want it and it the cost is not "life changing" go for it!
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02-14-2020, 11:05 AM | #13 |
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I disagree with jmciver and agree with toddwalton . just lease.
but I'll also add that the main reason for me is that the safety features and protection of a new car is far better. Take any 40 year old car and crash it into any new car. the new one will always win due to seatbelts, airbags, etc. the difference is less 5 years apart, but you get my idea. old cars are like old homes, they have tons of problems from wiring to plumbing to heating and cooling. I've replaced the electrical system and fuel system on too many old cars to ever buy a used car again. Also, you have to consider that no one ever sells a "good" car that works well. so most used cars are previous junk; unless it came off lease or such. it's personal, but I'd rather drive a new honda civic than any 10 year old car. so lease is the cheapest way to go. with jmciever, the amount of time and money you will spend on any car over 8 years old is far exceeded by the price of a new car's depreciation. unless you make minimum wages, your time and money shouldn't be spent in a shop when you could be on the road making business. |
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02-14-2020, 11:05 AM | #14 |
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Buy a limited Porsche GT car or Ferrari lightweight and you will say good bye to depreciation forever
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02-14-2020, 11:25 AM | #15 |
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I rather drive a 10 year old Bentley Mulsanne than a new Honda Civic.
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02-14-2020, 12:21 PM | #16 | |
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hahahaa, winner
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I should clarify to say for under $3k/yr I'd rather lease and have a new car every year, that's never in the shop and I spend 0 time in the dmv or fixing it. versus rather than pay maintenance and rental fees on an old car while it's in the shop. |
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02-14-2020, 12:43 PM | #17 | |
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1) Safety is obviously important, and new safety tech is always a welcome thing, but that does not mean the safety tech in older cars (less than 10 years is very different than a 40 yr old car) makes them unsafe to drive. For example, I recently purchased for my teenage son a 2009 BMW 128i. Besides my basic principle of refusing to buy a teenager a brand new new car (I don't care what brand/model), from a safety perspective, I knew it had all of the modern safety requirements necessary to help protect him in case of an accident - such as multi-stage airbags and traction control. Extra "nannies" like lane change warning or automatic braking are nice, but not paramount, life or death safety technology. I further enhance his safety by things like proper tires and of course driver education (and not just the basic crap driver school that is necessary to get a license - real driver education). And while the car was used, I did a thorough pre-purchase inspection and knew exactly what I was getting into from a maintenance/reliability cost perspective - and that homework has paid off. 2) From a long term cost perspective, I actually did the math on one of the cars that I paid off and kept for a while. Basically adding up 6+ years of would-be car payments vs the actual post warranty cost to maintain/fix the car up until I got rid of it - I came out thousands of dollars ahead. But more important than the total amount saved by the end of vehicle ownership was the flexibility to do other stuff with my $$ instead of paying a perpetual car payment each month. 3) Regarding having to deal with "old car problems" as you mentioned, this is where doing your homework and putting a bit of extra effort before making a purchase (new or used) comes in to play. There are some cars that I would never buy (new or used) based on poor reliability history (for example, the BMW 7-series and 5-series can fall into this category, but typically not the 3-series), which would lead to a lot of old car expenses - so choose your car brand & model wisely. Also factory preventative maintenance is key - you need to do it, and then a bit more (a lot of people underestimate the importance of this). The included maintenance that comes with most new cars is barely enough for long term maintenance reliability and is more driven by saving $$ for the manufacturer than actual longevity of the vehicle. So for example changing "lifetime" fluids in the car at some basic periodicity is a must if you want to maximize long term reliability - and it doesn't cost much $$ or take that much time to do. And finally, being observant to what happens to the car (because "stuff" can always happen), then proactively addressing it so that it doesn't fester will help a car last longer as well. All too often the averge car owner will not pay attention to something being slightly off with their car and not address it once you are out of the new car honeymoon period (even when it comes to issues that may be covered under warranty). Lastly, the advent of extended car warranties makes long term ownership of older cars less of a financial risk today compared to 5+ years ago when extended car warranties were essentially non-existent. There are several options available today. While not the same as the new car bumper-to-bumper warranty (nothing is), if you do your homework here, there are good ones that will cover all of the "usual suspects" that may break out 8-10 years and 100k+ miles for a few thousand dollars - typically less than 3-4 years worth of car payments. But admittedly, even my limit is approx 9-10 years and 130k-150k miles before I start looking for a change (with my 2005 M3 track car being the exception), which is why I am getting anxious to get out of my Expedition and into the X7 . I know there are some who like to go even longer...... At the end of the day, I think it is all about how much is your time and enjoyment of your car is worth to you - it is a pay me now or pay me later type of thing. I like to DIY on my cars so doing some maintenance (and personal modifications) on them which saves a lot of $$ in labor does not bother me as I see the long term benefit. I also don't like the idea of perpetual car payments either. But I completely understand why others may prefer a more "set-it and forget it" approach when it comes to vehicle ownership, and don't mind paying the $$ to get what they want, how they want, to satisfy their piece of mind.
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02-14-2020, 01:58 PM | #18 | ||
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If you're a mechanic and can fix old cars, it's well worth it. Likewise it's probably a good idea to give hand me downs to kids. My dad would buy a new car, give it to mom, then me; so every two years we had a new car that passed along the lines. Although when it comes time for my kids, they will probably Uber or use the subscription rental companies or lease a Honda Civic or similar. Because I'm not driving anything less than my M850i; and that v8 is probably too much power for kids. |
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02-14-2020, 02:03 PM | #19 |
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huskerdoc2020 I totally understand the thoughts. And my approach is very similar to jmciver . I purchase my vehicles. I research large purchases very, very carefully. And then I keep my vehicles for a long time. I planned on owning my 2004 330i for 10 years before getting another new car, but here it is 16 years later, and I still love and drive the thing. I've had absolute minimal maintenance on it. Drives like a dream. And I haven't had a car payment of any type for 11 years.
Do I care how much depreciation I have on it? Not a bit. I've enjoyed and used it for 16 years now, and gotten full value out of it. Matter of fact, I'm keeping it, and probably giving it to my daughter to be her first young adult car. My upcoming X7 will be more than TWICE as expensive as any car I've ever bought. Yes, that gets to me. But I've researched the hell out of it, am investing in it, and don't plan on getting anything out of it monetarily on the back end. Instead, I plan on fully using and enjoying it for at least 10 years. I'm investing in my extended use and enjoyment. I'm not the "drive the latest and greatest car every 3 years" kind of guy. My only hope is that the X7 maintenance and reliability lives up to the long-term ownership plan. |
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02-14-2020, 03:31 PM | #21 | |||
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Here is another one for you.... One pre-condition I had before my son could get his license was that he needed to learn and be proficient with stick. My F80 M3 is 6MT and I had to practically throw the keys to my M3 at him to get him to drive it so that he met my criteria .... Of course, the 128i I bought him was also a 6MT (which was my original intent), which also serves a dual purpose as a Millennial Anti-Theft device for his car .....
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02-14-2020, 03:45 PM | #22 |
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Been following this forum since I'm thinking of an X7 as my next vehicle. Didn't have anything to add previously, but this is an interesting thread.
The main issue with a $122k X7 is that it is loaded and any trade-in never takes options into account. That and in general the more expensive vehicles have higher depreciations because people who can afford $80-90k used vehicles can often afford $100+k new ones. If you go private sale afterwards the depreciation is less but then you have to deal with the headaches of that. I've thought about leasing from time to time, I can't write anything off business wise, and my problem is I put too many miles often to make a lease work--like 17,500 miles a year. Of course I can still lease a car with higher mileage allowances but the payments will be really high. My mantra has been purchasing and driving for 6 years up to 90-100k. I'm at 72k right now, so if my math is correct it'll be time to get something next year. I agree there's a cost of driving every month and treating it like a utility--unless you are a celebrity or a privileged high schooler, nobody drives anything for free. |
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