Buying a luxury car (how dumb would it be to do this?)

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Traveller
Posts: 616
Joined: Sat Jun 25, 2011 10:47 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by Traveller » Thu May 04, 2017 5:22 pm

I say "go for it" but do so with a few years old used.

Full disclosure: I have very high income but am notoriously cheap with cars. I always buy used and always pay cash. I spent last weekend doing the grind-bondo-sand-paint-clearcoat-sand-polish-wax thing to fix a rust spot that showed up on my 2010 Ford Fusion hybrid with 183k miles. I am sick of boring, plain cars. I am ready for something more interesting and have become intrigued by a 2-3 year old Jaguar XF in British Racing Green with London Tan interior. Problem is there are only a few of them for sale used in the US right now, so I think I am probably flying somewhere this weekend to drive one home.

So I need you to pull the trigger, buy a used X5, and make me feel better for not being the only one... :beer

lazydavid
Posts: 1130
Joined: Wed Apr 06, 2016 1:37 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by lazydavid » Thu May 04, 2017 6:36 pm

bloom2708 wrote: I look at my local Craigslist. How could these BMW cars sell for $9,500? ~60k miles.

I realize they are from 03, 04, but could the owners not even limp them to $100k miles? The 745 was north of $70k when new.
You answered your own question. They're 15 year old cars. But that's nothing. There's a 2000 Grand Marquis on there for $800. It was $30k new. almost half the original cost, and well under 1/10th of the current selling price. That's just what happens when cars get old.

For comparison purposes, my wife's Lexus stickered for over $60k when new. It's now 10 years old and KBB says it's worth less than $8500 in a private party sale, and only $6900 on trade. The two BMWs you posted are 50% older and STILL worth more.

Hell my Father-in-Law's Nissan was almost $50k, is 6 years old with just 22k miles, and is now worth less than $20k. The way of the world....

Frisco Kid
Posts: 275
Joined: Sun Nov 16, 2014 6:18 pm
Location: San Francisco Peninsula

Re: Buying a luxury car (how dumb would it be to do this?)

Post by Frisco Kid » Thu May 04, 2017 7:11 pm

You can afford it, a couple of thoughts;

I also think an X5 is too small for 4 kids, a Highlander could be too?

Buy CPO and save a bunch

The deal breaker for me is cost of maintenance/repairs out of warranty on ANY BMW.

User avatar
ram
Posts: 881
Joined: Tue Jan 01, 2008 10:47 pm
Location: Midwest

Re: Buying a luxury car (how dumb would it be to do this?)

Post by ram » Thu May 04, 2017 7:42 pm

After driving hondas and toyotas for many years I got a Lexus LS 460 about 18 months ago. We like it. No regrets . Got it used(CPO) for about 60% of the initial cost.
Ram

lazydavid
Posts: 1130
Joined: Wed Apr 06, 2016 1:37 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by lazydavid » Thu May 04, 2017 8:09 pm

Frisco Kid wrote:The deal breaker for me is cost of maintenance/repairs out of warranty on ANY BMW.
Doesn't have to be. My previous 2000 E46 was far and away the cheapest car to own that I've ever had any personal connection to.* It required two out of warranty repairs--$90 for a Final Stage Resistor, and $50 for replacement VANOS seals. All-in, over 12 years and 125k miles, it cost me a little over $5k in repairs and maintenance, INCLUDING tires, brakes, batteries, oil changes, and wiper blades, as well as replacing all the so-called "lifetime" fluids. My current one's been out of (extended) warranty for about a year, and I don't expect much trouble with it either, aside from the wonky emissions crap.

*My Dad's '88 Camry was actually cheaper, but that's because he took advantage of replacement parts with lifetime warranties, in many cases from places that are no longer in business (perhaps because of said lifetime warranties?). So beyond the first time, when he had to get his exhaust replaced every 3 years, or had to swap out a failed starter or alternator every other year, the hard cost was $0. But that's kind of cheating. :) He did have to have the transaxle removed to replace a flywheel that had lost several teeth, and I'm sure that wasn't cheap.
Last edited by lazydavid on Thu May 04, 2017 8:10 pm, edited 1 time in total.

2Birds1Stone
Posts: 365
Joined: Wed Nov 19, 2014 10:33 pm
Location: New York

Re: Buying a luxury car (how dumb would it be to do this?)

Post by 2Birds1Stone » Thu May 04, 2017 8:10 pm

I'm a big car guy. As in, I really like driving.

I've always dreamed of a nice sports luxury car since it's first iteration came out during my HS years. At the time it was the Infiniti G35 Sport coupe.

I was actually shopping for Mini Cooper S last year, when I came across a 2008 G37 Sport coupe, with only 21k miles. 6 speed manual, RWD, fully loaded.....for $16.9k

Now the person I purchased the car from, paid $46k with tax, title, reg....+ a few $k more in interest. They put 21k miles on the car in 8 years. The depreciation alone cost them $1.50/mile.

After a year, the car has been nothing short of amazing, and I got to enjoy it for pennies on the dollar.

carguyny
Posts: 184
Joined: Mon Aug 08, 2016 4:56 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by carguyny » Thu May 04, 2017 8:22 pm

Check out what lease deal you can get on an X5 - I got a quote a few months ago for an X5 i40 (their hybrid) at $599/month for 36 months. I always lease daily drivers/family cars. I like to keep them up to date with latest safety/tech and replaced regularly.

Jack FFR1846
Posts: 5738
Joined: Tue Dec 31, 2013 7:05 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by Jack FFR1846 » Thu May 04, 2017 8:44 pm

ram wrote:After driving hondas and toyotas for many years I got a Lexus LS 460 about 18 months ago. We like it. No regrets . Got it used(CPO) for about 60% of the initial cost.
Yikes! I thought Lexus held their value. I just did a kbb trade in check on my Wrangler which came up (average value point) of $27,272. I paid $28k for it 3 years ago brand new.
Bogle: Smart Beta is stupid

letsgobobby
Posts: 10611
Joined: Fri Sep 18, 2009 1:10 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by letsgobobby » Thu May 04, 2017 11:41 pm

I'm 43 and have recently realized how short life is. So, I just bought myself my first new vehicle ever (I have bought 2 new cars for my wife, who gave me her hand me downs). OP, you can afford the car. As long as you are sure to enjoy driving this one for ten years, You're good to go.

JGoneRiding
Posts: 986
Joined: Tue Jul 15, 2014 3:26 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by JGoneRiding » Fri May 05, 2017 12:07 am

livesoft wrote:Plenty of used BMW X5's for sale for under $15K. That tells me a lot. You can get 2 or three of them.
This!! my husband the car guy is sitting next to me going, well if you are going to spend 55k at least get a car that holds a lot of value--his suggestions are Porsha 911 or Really nice mustang--Shelby


though with 4 kids I think you would need one of those Porsha suv things (so I am not the car person)

JGoneRiding
Posts: 986
Joined: Tue Jul 15, 2014 3:26 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by JGoneRiding » Fri May 05, 2017 12:14 am

lazydavid wrote:
bloom2708 wrote: I look at my local Craigslist. How could these BMW cars sell for $9,500? ~60k miles.

I realize they are from 03, 04, but could the owners not even limp them to $100k miles? The 745 was north of $70k when new.
You answered your own question. They're 15 year old cars. But that's nothing. There's a 2000 Grand Marquis on there for $800. It was $30k new. almost half the original cost, and well under 1/10th of the current selling price. That's just what happens when cars get old.

For comparison purposes, my wife's Lexus stickered for over $60k when new. It's now 10 years old and KBB says it's worth less than $8500 in a private party sale, and only $6900 on trade. The two BMWs you posted are 50% older and STILL worth more.

Hell my Father-in-Law's Nissan was almost $50k, is 6 years old with just 22k miles, and is now worth less than $20k. The way of the world....
My 10 yr Subaru was 36k brand new. I bought it at 15k miles for 23k. Its still NALA at 12k So it is possible to buy a nice car that holds up well and doesn't plummet like a rock in value. (Nala does give out higher values than KBB, KBB says its only worth 8500)

SQRT
Posts: 562
Joined: Sat Feb 05, 2011 9:44 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by SQRT » Fri May 05, 2017 1:00 am

You can afford it. If you really want it, go for it. Does your spouse agree? She should. Pay cash for it as that will test your resolve as to whether you really want it. Couple years old would be smarter probably.

I have driven X5's for 17 years. Great but expensive. Also have a couple M cars. Now they are really fun! Balance in your life is important. You should be able to indulge a bit as long as you don't go overboard. Don't want to be the richest guy in the cemetery. Everybody has a different idea of what they want to spend their money on. A very personal thing.

lazydavid
Posts: 1130
Joined: Wed Apr 06, 2016 1:37 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by lazydavid » Fri May 05, 2017 5:06 am

JGoneRiding wrote:My 10 yr Subaru was 36k brand new. I bought it at 15k miles for 23k. Its still NALA at 12k So it is possible to buy a nice car that holds up well and doesn't plummet like a rock in value. (Nala does give out higher values than KBB, KBB says its only worth 8500)
36k->8.5k is still a 77% drop. All my figures were KBB, so not exactly a straight comparison to use a different metric just for yours. Did a bit better than my wife's Lexus, but probably lower mileage too. If her car had half the mileage it does (she has 145k), its value would be 78% less than sticker, as opposed to 86% less.

Some cars have steeper initial depreciation than others, and that tends to be more on the luxury side. But on longer timeframes like the 10-15 years we're talking about, it tends to even out. There's some variation to be sure, but they all wind up in the same general vicinity.

That you were able to buy yours low mileage at $23k doesn't negate the depreciation curve, it just means you took advantage of it. you were able to buy a lightly-used (2 years perhaps?) car for 36% off sticker. I did the same thing, bought my $54k car as a demo (9k miles, 1 year old but never titled) for $38k, saving 29%.

corn18
Posts: 434
Joined: Fri May 22, 2015 6:24 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by corn18 » Fri May 05, 2017 6:59 am

lazydavid wrote:
JGoneRiding wrote:My 10 yr Subaru was 36k brand new. I bought it at 15k miles for 23k. Its still NALA at 12k So it is possible to buy a nice car that holds up well and doesn't plummet like a rock in value. (Nala does give out higher values than KBB, KBB says its only worth 8500)
36k->8.5k is still a 77% drop. All my figures were KBB, so not exactly a straight comparison to use a different metric just for yours. Did a bit better than my wife's Lexus, but probably lower mileage too. If her car had half the mileage it does (she has 145k), its value would be 78% less than sticker, as opposed to 86% less.

Some cars have steeper initial depreciation than others, and that tends to be more on the luxury side. But on longer timeframes like the 10-15 years we're talking about, it tends to even out. There's some variation to be sure, but they all wind up in the same general vicinity.

That you were able to buy yours low mileage at $23k doesn't negate the depreciation curve, it just means you took advantage of it. you were able to buy a lightly-used (2 years perhaps?) car for 36% off sticker. I did the same thing, bought my $54k car as a demo (9k miles, 1 year old but never titled) for $38k, saving 29%.
I did the same with my Z4. Sticker for a new one is $62k. I bought a 2015 CPO with 14,000 miles in immaculate shape for $37k. Many thanks to the previous lease owner for the leg up.

User avatar
CyclingDuo
Posts: 839
Joined: Fri Jan 06, 2017 9:07 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by CyclingDuo » Fri May 05, 2017 7:23 am

3 Million leased cars will come off their leases this year alone in the US.
4.1 Million next year.

Used car prices, and new car inventory negotiations will turn in favor of the consumer for those that can wait. :dollar :moneybag :dollar :greedy

User avatar
jharkin
Posts: 1249
Joined: Mon Mar 28, 2016 7:14 am
Location: Boston suburbs

Re: Buying a luxury car (how dumb would it be to do this?)

Post by jharkin » Fri May 05, 2017 7:35 am

(I only skimmed the thread, apologies if I repeat a point already made)

If all you have ever owned are Toyota's and Honda's the maintenance headaches of the BMW will be an eye opener. Also, one of my parents friends used to own an X5 (ealy 2000's model). It drives like an SUV with a lot of power and a stiff suspension, not really like a sportscar. It will be comfy but dont expect its going to fill your desire for 'fun' driving, its a BMW marketed to yuppie SUV buyers who just want the badge to showoff.

If you want actual fun, take that money and instead by a Pilot or Highlander, and use the excess $ to buy a Miata for commuting. And it better be a manual :)


[EDIT: On a more thorough read I see you have a high savings rate and thus live well below your means, disregard the below]
BTW, it bears considering that if you hope to retire early your current 500k retirement fund is on the low side to support a 300k standard of living in retirement. You may need to ramp up the savings rate, downsize the standard of living or work all the way to 65+ (or some combination). You probably already though of this, but just in case...
Last edited by jharkin on Fri May 05, 2017 11:17 am, edited 3 times in total.

gr7070
Posts: 172
Joined: Fri Oct 28, 2011 10:39 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by gr7070 » Fri May 05, 2017 7:38 am

Are you giving a reasonably large amount to charities? I wouldn't be spending $60k on a car unless I was already giving a serious chunk of money annually to worthy charities.

Something to consider before dropping a large amount on something like this.

gouverneur
Posts: 51
Joined: Sat Apr 23, 2016 10:25 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by gouverneur » Fri May 05, 2017 7:54 am

I'll weigh in on the side of getting the car. OP has a passion for cars and an interest in them. The car will provide him enjoyment, and he can afford it. His savings rate is strong (37% of pre-tax income). His job has greater security than most, as does his wife's, reducing the risk of being stuck with bills he and his wife can't afford.

Being financially prudent as a person of high income, as OP clearly is, means taking care of your obligations, saving for the future, and then enjoying the rest of it. If he saves at current rates and retires at 67, hardly unheard of for a professor, they will have $4M+ in savings (assuming 3% real growth rate) and an annual spending capacity in retirement of $140k+, not including SS or whatever pension or continued income streams his academic work might provide. It seems to me he's going to be in good shape no matter what car he has.

User avatar
sunny_socal
Posts: 1266
Joined: Tue Mar 24, 2015 4:22 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by sunny_socal » Fri May 05, 2017 8:58 am

ncbill wrote:
Lease it. LEASE LEASE LEASE LEASE LEASE.

As others have said you get a 3 year test drive, which allows you to learn its quirks/problems while it's still under warranty.

You preserve your liquid savings.

Your cash flow is more than adequate to pay the monthly cost (lease payment + taxes + increase in insurance)

Start here: http://forum.leasehackr.com & read/ask about the specific model(s) you're considering.

You're going to make some lucky Boglehead very happy in the future :moneybag :greedy :beer You'll have eaten through all the "new car depreciation." They'll get an even better warranty when they buy your vehicle as a CPO.

User avatar
knpstr
Posts: 1798
Joined: Thu Nov 20, 2014 8:57 pm
Location: Michigan

Re: Buying a luxury car (how dumb would it be to do this?)

Post by knpstr » Fri May 05, 2017 9:03 am

It's a very reasonable purchase given your circumstances.

My brother and his wife drove a X5 for some time and they loved it! If you've dreamed about owning one, why not? You aren't neglected other financial responsibilities.

enjoy!
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

NoVa Lurker
Posts: 639
Joined: Tue Jan 18, 2011 11:14 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by NoVa Lurker » Fri May 05, 2017 9:05 am

TBillT wrote:I'd ask what state you live in, because in Va. we tax the heck out of cars annually.
But most states not so bad.
This was my thought as well. In Virginia, our municipalities tax vehicles annually - yes, every year - at 4.57% of assessed value. The assessments are aggressive - a bit higher than what you could get if you sold it. So if you buy a $50k car, you'll pay a car tax of about $2300 the first year, and still over $2000 each year, for the next few years. If you have a 2005 Prius with a ton of miles, your car tax might be more like $150/year.This is quite an incentive to keep the old car running, and it's a disincentive to having an extra "fun" car for a family (or, really, for the dad having the usual mid-life crisis in his 40s).

My finances are similar to OP, and I did just splurge on a new carbon bike, but at least I only pay a one-time sales tax!

Back to the original question, OP, you may want to read this article before you make a final call: https://scholar.harvard.edu/files/danie ... -20101.pdf

And this thread: viewtopic.php?t=206859

And finally, this excerpt from an old post by Nisiprius (unfortunately I can't find the thread, but I save my favorite individual Bogleheads posts, and this is one):
Nisiprius from years ago wrote:I don't think "things" versus "experiences" is quite right. A packaged, more or less passive experience is just a kind of "thing." That doesn't mean it's bad, of course. And it's a continuum.

The extra value of the "experience" only comes if you put something of yourself into it; for example, if it involves some effort, some degree of skill acquisition perhaps. It doesn't necessarily need to be anything profound, but the question is whether you come out of it slightly changed from when you went in. And how much of a state of "flow" you experienced while you were there.

The pleasure of the experience also comes from deliberately creating for yourself a small and controlled amount of challenge or stress. It's a little like a crossword puzzle--it's no fun if it's too easy and it's no fun if it's too hard.

An amusement park is rather at the packaged end of the spectrum--no skill needs to be acquired to ride a roller coaster, or to have someone tell you to cross your legs and arms as they ease you over the edge of a sixty-foot-high straight vertical waterslide. But it is still an experience, a brush with physical fear.

The problem with "vacations" (and cruises, although I've never been on one) is that they are often even more passive and less challenging than the amusement park. Most of the money is spent, on, basically, servants. For a week, or however long, someone else prepares the meals and makes the beds for you. If you go on guided tours, you don't even experience the mild challenge of getting lost in a city where you don't speak the language.

So it's all how you use it. Not to knock cruises or theme parks, but they're much like buying a spiffy new shirt or a Kindle Fire--there's a burst of pleasure and maybe it last for months.

A "thing" is an enabler of experiences--necessary hobby or craft gear, for example, provided you don't go overboard buying stuff--then it may be a better purchase than a totally passive "experience."

Admiral
Posts: 854
Joined: Mon Oct 27, 2014 12:35 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by Admiral » Fri May 05, 2017 9:35 am

bloom2708 wrote:My takeaways come down to, is buying the X5 "Family Truckster" going to meet the "cool, fun, car" criteria. I don't think so.

I look at my local Craigslist. How could these BMW cars sell for $9,500? ~60k miles.

https://fargo.craigslist.org/cto/6115854163.html

https://fargo.craigslist.org/cto/6074194552.html

I realize they are from 03, 04, but could the owners not even limp them to $100k miles? The 745 was north of $70k when new.

I know people in Fargo have to drive 3.5 hours to Minneapolis to service their cars. Very interesting thread.

https://fargo.craigslist.org/cto/6088867389.html

Here is another "fun" car. This price point might be worth a "flier" $6,750 for some summer fun.
Anyone who knows BMWs knows to run away screaming from 7 Series car out of warranty, and 60,000 miles is often the break point in terms of very expensive repairs/maintenance (for lots of cars, not just BMWs).

I'd also point out that mileage is only one factor in terms of used car values. A second is age (a 2003 MY year car could be as old as 15 years), and a third is geographic location. Fewer buyers means lower prices. Fargo is not New York City.

fantasytensai
Posts: 343
Joined: Fri Sep 30, 2016 3:30 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by fantasytensai » Fri May 05, 2017 9:38 am

2Birds1Stone wrote:I'm a big car guy. As in, I really like driving.

I've always dreamed of a nice sports luxury car since it's first iteration came out during my HS years. At the time it was the Infiniti G35 Sport coupe.

I was actually shopping for Mini Cooper S last year, when I came across a 2008 G37 Sport coupe, with only 21k miles. 6 speed manual, RWD, fully loaded.....for $16.9k

Now the person I purchased the car from, paid $46k with tax, title, reg....+ a few $k more in interest. They put 21k miles on the car in 8 years. The depreciation alone cost them $1.50/mile.

After a year, the car has been nothing short of amazing, and I got to enjoy it for pennies on the dollar.
Just want to add that the Mini Cooper S is also helluva fun to drive as well, as long as you are not too large of a person.

fantasytensai
Posts: 343
Joined: Fri Sep 30, 2016 3:30 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by fantasytensai » Fri May 05, 2017 9:39 am

JGoneRiding wrote:
livesoft wrote:Plenty of used BMW X5's for sale for under $15K. That tells me a lot. You can get 2 or three of them.
This!! my husband the car guy is sitting next to me going, well if you are going to spend 55k at least get a car that holds a lot of value--his suggestions are Porsha 911 or Really nice mustang--Shelby


though with 4 kids I think you would need one of those Porsha suv things (so I am not the car person)
But a 911 is closer to 90k than 50k.

bloom2708
Posts: 2831
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Buying a luxury car (how dumb would it be to do this?)

Post by bloom2708 » Fri May 05, 2017 9:43 am

Admiral wrote: Anyone who knows BMWs knows to run away screaming from 7 Series car out of warranty, and 60,000 miles is often the break point in terms of very expensive repairs/maintenance (for lots of cars, not just BMWs).

I'd also point out that mileage is only one factor in terms of used car values. A second is age (a 2003 MY year car could be as old as 15 years), and a third is geographic location. Fewer buyers means lower prices. Fargo is not New York City.
I personally would never buy a 15 year old BMW (or a 0-3 year old BMW). The discussion just made me do some searches. You are correct. Fargo is not New York City. :wink:
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

ncbill
Posts: 91
Joined: Sun Jul 06, 2008 4:03 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by ncbill » Fri May 05, 2017 9:49 am

sunny_socal wrote:
ncbill wrote:
Lease it. LEASE LEASE LEASE LEASE LEASE.

As others have said you get a 3 year test drive, which allows you to learn its quirks/problems while it's still under warranty.

You preserve your liquid savings.

Your cash flow is more than adequate to pay the monthly cost (lease payment + taxes + increase in insurance)

Start here: http://forum.leasehackr.com & read/ask about the specific model(s) you're considering.
You're going to make some lucky Boglehead very happy in the future :moneybag :greedy :beer You'll have eaten through all the "new car depreciation." They'll get an even better warranty when they buy your vehicle as a CPO.
Of course, (non-business) leasing isn't for someone "living a million dollar lifestyle on $30,000/year."

But in this case the prospective owner currently owns mass-market, but reliable vehicles.

Paying just for the routine maintenance during the lease (much less out-of-warranty repairs) might push them back to a Toyota. :happy

Leasing gives them that option, albeit at a higher cost.

Since they have no experience with this type of vehicle, and given the financial info posted, IMHO it would prudent to cash-flow the X5 experience, then buy it out or buy a CPO at lease-end if they really love it.

EDIT: After reviewing the owner reports from the April 2017 Consumer Reports auto issue, I would not own, even CPO.

Better to lease a new one every few years to avoid the problems in multiple systems in those over 3 years old.
Last edited by ncbill on Fri May 05, 2017 11:33 am, edited 3 times in total.

inbox788
Posts: 4142
Joined: Thu Mar 15, 2012 5:24 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by inbox788 » Fri May 05, 2017 11:05 am

CyclingDuo wrote:3 Million leased cars will come off their leases this year alone in the US.
4.1 Million next year.

Used car prices, and new car inventory negotiations will turn in favor of the consumer for those that can wait. :dollar :moneybag :dollar :greedy
I've seen a number of news articles pointing to a peak in car sales, which may be correct. But it was only a year or two ago that average car ages reached a peak, which was a sign of pent up demand. http://www.autonews.com/article/2016112 ... 11.6-years
They're also quoting increasing manufacturing capacity and possible surplus coming online. http://money.cnn.com/2017/01/04/news/co ... ales-2016/
Some add the leased cars that are coming back on the market to the supply, but forget that it's mostly a wash and ignoring the customers who return them will most likely need a replacement car. That's why car dealers love leases, since they know they have another shot at the customer in 3 years. You're on a perpetual lease/re-lease wheel.
I thought leasing was approaching 50%, but the percentage is probably closer to 30%, so 30% of 17M is 5M cars that are going off lease in 2-3 years.

The sky is not falling on the auto industry, and focusing on lease returns is a red herring. The real source of new car buying are those older 11.6+ year old cars that are being junked as well as new/more drivers.

User avatar
CyclingDuo
Posts: 839
Joined: Fri Jan 06, 2017 9:07 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by CyclingDuo » Fri May 05, 2017 12:05 pm

inbox788 wrote:
CyclingDuo wrote:The sky is not falling on the auto industry, and focusing on lease returns is a red herring. The real source of new car buying are those older 11.6+ year old cars that are being junked as well as new/more drivers.
The post was made more in interest of the lease fleet that will be for sale in the used market. Our money is on a softening in used car prices...

http://www.chicagotribune.com/classifie ... story.html

Wolkenspiel
Posts: 521
Joined: Wed Sep 30, 2009 7:45 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by Wolkenspiel » Fri May 05, 2017 12:45 pm

KevinIA wrote:A BMW X5 is a wonderful car, but since you are used to driving a Toyota make sure you factor in the $300 oil changes, $1500 sets of tires that last 20k miles, and any out of warranty work even with an independent shop will be expensive.
A set of OEM tires for my 2012 X5 is $750 or less for 18" and $1000 or less for 19"; they last significantly more than 20k miles. Oil changes are free for 4 years, and then $150 or less. My car (but with only 26k miles) has not led to any out-of-pocket costs, other than for oil changes in the 2 1/2 years it has been out of warranty. Maybe that was just luck.

With 4 kids, I would actually go a little larger and get a new Q7. The 3rd row seats in the X5 are ok for emergencies, but not much fun for regular use. Q7 also has a nicer interior and rides/drives better. It's obvious that the OP can afford either. I'd probably get a CPO Q7 with ~4 years total warranty remaining.

Wolkenspiel
Posts: 521
Joined: Wed Sep 30, 2009 7:45 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by Wolkenspiel » Fri May 05, 2017 12:50 pm

ncbill wrote: Paying just for the routine maintenance during the lease (much less out-of-warranty repairs) might push them back to a Toyota. :happy
OP will have difficulties trying to pay for the X5's FREE "routine maintenance" during the lease. All baked in the price of course, but no surprises.

lazydavid
Posts: 1130
Joined: Wed Apr 06, 2016 1:37 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by lazydavid » Fri May 05, 2017 12:57 pm

Wolkenspiel wrote:With 4 kids, I would actually go a little larger and get a new Q7. The 3rd row seats in the X5 are ok for emergencies, but not much fun for regular use. Q7 also has a nicer interior and rides/drives better. It's obvious that the OP can afford either. I'd probably get a CPO Q7 with ~4 years total warranty remaining.
Most CPO'd Q7s will still be the first gen, through MY2015. There was no 2016, and the 2017 is quite dramatically improved, including being 700lbs lighter! Used/CPO 2017s exist, but they're still pretty rare, and very little savings over what you can negotiate on a new one. I'm seeing like 8-10% off sticker. Since 3-6% off is doable on a new one depending on the dealer, I'd definitely go new.

inbox788
Posts: 4142
Joined: Thu Mar 15, 2012 5:24 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by inbox788 » Fri May 05, 2017 1:00 pm

CyclingDuo wrote:
inbox788 wrote:
CyclingDuo wrote:The sky is not falling on the auto industry, and focusing on lease returns is a red herring. The real source of new car buying are those older 11.6+ year old cars that are being junked as well as new/more drivers.
The post was made more in interest of the lease fleet that will be for sale in the used market. Our money is on a softening in used car prices...

http://www.chicagotribune.com/classifie ... story.html
I think there's a link between new and used car prices, so softening may occur with both if the supply of cars exceeds the demand. On the demand side, the fewer number of new teen and millennium drivers vs more retired drivers. Moves into cities less dependent on cars and more Uber use may also reduce demand. Cheaper or stable gas prices may encourage more driving. People keeping an extra car or more may increase demand. On the supply side, there are still a lot of older cars, and it's not clear if those are attached to drivers or being driven. Also, more reliable cars means they last longer. Safer cars also mean less losses to wrecks. You'd think 7 years of record growth in car sales would put a dent in that used car age number. Maybe a few years of softening sales will do the job.

https://www.rita.dot.gov/bts/sites/rita ... 6.html_mfd

One more factor is the improving economy, which should drive more new car sales and luxury car sales. And more money in the pockets of those buying used cars will incent them to pay more and buy less used cars. So while we may see a little softening, I don't expect prices to fall off a cliff, but if it does, I might just pick up a spare used car. Luxury car. Just not an X5. Or other high maintenance risk.

Easy Rhino
Posts: 3202
Joined: Sun Aug 05, 2007 11:13 am
Location: San Diego

Re: Buying a luxury car (how dumb would it be to do this?)

Post by Easy Rhino » Fri May 05, 2017 2:00 pm

I think you can afford it, but I'd look into going used to avoid some depreciation.

But moreso, I'm trying to figure out if this is the right type of car to get. You've got 6 people in the family. You already have a minivan as the primary hauler, and the Rav4 (seats 5, right?). how's that working out for you? do you need more space in the Rav? Does it never get utilized?

I have a hunch you can either buy a smaller, sportier car, or you need to go bigger. Was the optional third row going to be a requirement on the X5?

KATNYC
Posts: 238
Joined: Fri Apr 07, 2017 4:34 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by KATNYC » Tue May 09, 2017 5:52 pm

Go for it, presuming it's the right size for your family.
I had a BMW 3 series and it was fun to drive. Bought it used and had it less than 3 years when it was totaled in an accident coincidentally, at the time I was selling it. I had flyers printed and everything. It was not cheap to maintain (no warranty) but thankfully I have a good mechanic who specializes in foreign cars. I just sold my used E320 Sedan with 125K miles (new transmission costs $2,500). The E320 was a deal since a friend owed me a ton of money and gave me the car to cover it (thousands under blue book).

I am looking at the BMW x3 now, used. They made changes in 2015 so I wouldn't want a 2014 x3.

User avatar
ElJay
Posts: 683
Joined: Tue Jun 12, 2007 6:08 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by ElJay » Tue May 09, 2017 10:22 pm

Admiral wrote: Anyone who knows BMWs knows to run away screaming from 7 Series car out of warranty, and 60,000 miles is often the break point in terms of very expensive repairs/maintenance (for lots of cars, not just BMWs).
My 2011 E90 3-Series turned 60k miles recently, and it's had about $3k in maintenance/repairs so far since January. I drooled over these cars as a kid, I love how it drives, and I also dreamed about doing Euro delivery one day... But man, the 2016 3-Series loaner ($45k sticker) that I had over my last repair visit is like some bean counter at 1990s GM got in and cheapened everything. I don't mind paying extra for something I feel is special, but BMW has a lot of ground to make up with the next 3-Series before I consider buying a second one.

daveydoo
Posts: 915
Joined: Sun May 15, 2016 1:53 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by daveydoo » Wed May 10, 2017 1:07 am

ElJay wrote:
My 2011 E90 3-Series turned 60k miles recently... But man, the 2016 3-Series loaner ($45k sticker) that I had over my last repair visit is like some bean counter at 1990s GM got in and cheapened everything. I don't mind paying extra for something I feel is special, but BMW has a lot of ground to make up with the next 3-Series before I consider buying a second one.
+100. I love the 2011s and hate the feel of the electric steering in all the later model years. Disliked all my loaners from 320 up through 335. But it looks like they're getting things figured out on the 2-series so I'm optimistic. I'm keeping my 2011, expensive upkeep and all, because it's still cheaper than anything new that I'd be looking at.

jlcnuke
Posts: 305
Joined: Thu Mar 16, 2017 10:26 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by jlcnuke » Wed May 10, 2017 8:08 am

gr7070 wrote:Are you giving a reasonably large amount to charities? I wouldn't be spending $60k on a car unless I was already giving a serious chunk of money annually to worthy charities.

Something to consider before dropping a large amount on something like this.
I think it's great that you're apparently very philanthropically motivated, but that's a personal choice and not something the OP mentioned as one of their priorities.

chuckieboy
Posts: 7
Joined: Wed Feb 15, 2017 9:37 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by chuckieboy » Wed May 10, 2017 8:40 am

I had a 2006 E90 BMW 325 manual transmission. Best car I ever owned even though it fell apart at 110K miles and had 4K of repairs. Test drove the newest gen 3-Series, 2-Series, and 4-Series and found them terrible. Out-of-date interior and the worst steering of any German car I ever drove. Bought a Mercedes C-class and while not as fun to drive as a BMW, the interior look/feel/fit-finish as light-years better than the BMWs.

Hopefully BMW makes some adjustments before I'm ready to buy a new car again.

gr7070
Posts: 172
Joined: Fri Oct 28, 2011 10:39 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by gr7070 » Wed May 10, 2017 4:23 pm

jlcnuke wrote:
gr7070 wrote:Are you giving a reasonably large amount to charities? I wouldn't be spending $60k on a car unless I was already giving a serious chunk of money annually to worthy charities.

Something to consider before dropping a large amount on something like this.
I think it's great that you're apparently very philanthropically motivated, but that's a personal choice and not something the OP mentioned as one of their priorities.
I don't understand the idea that replies should only comment on the exact specifics stated in the OP. If there are valid considerations, but they haven't been mentioned they absolutely should be proposed for consideration.

The question he did pose is a personal choice (inviting outside opinions)! And my comment clearly acknowledges so by stating "something to consider".

Nearly everyone in this country should be donating at least some amount, especially those of us fortunate ones on BH. It's even a good thing for us financially, not just spiritually.

I hope they make their decision with this in mind.

jlcnuke
Posts: 305
Joined: Thu Mar 16, 2017 10:26 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by jlcnuke » Wed May 10, 2017 4:44 pm

gr7070 wrote:
jlcnuke wrote:
gr7070 wrote:Are you giving a reasonably large amount to charities? I wouldn't be spending $60k on a car unless I was already giving a serious chunk of money annually to worthy charities.

Something to consider before dropping a large amount on something like this.
I think it's great that you're apparently very philanthropically motivated, but that's a personal choice and not something the OP mentioned as one of their priorities.
I don't understand the idea that replies should only comment on the exact specifics stated in the OP. If there are valid considerations, but they haven't been mentioned they absolutely should be proposed for consideration.

The question he did pose is a personal choice (inviting outside opinions)! And my comment clearly acknowledges so by stating "something to consider".

Nearly everyone in this country should be donating at least some amount, especially those of us fortunate ones on BH. It's even a good thing for us financially, not just spiritually.

I hope they make their decision with this in mind.
I'd disagree that giving away money is financially "good", but I'll concede the rest of your points as valid opinions.

BruDude
Posts: 2610
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Buying a luxury car (how dumb would it be to do this?)

Post by BruDude » Wed May 10, 2017 5:06 pm

I bought a 911S for fun and an X3 for grocery-getting. The 911S is probably worth $10-15k more today than what I paid for it a year ago and the X3 was only $19k with 75k miles on it and some CPO warranty remaining (original sticker $60k). If you know what you're looking for, there are good deals to be had...I've never lost more than $5k on the purchase and sale of a car even after driving them for a few years. SUV's will always have more depreciation since they're a dime a dozen, but I expect to be able to drive this X3 for at least 3 years and probably sell it for $13-15k when I'm done. As long as nothing major breaks I should have a pretty low overall cost of ownership....and both cars still put a smile on my face every time I drive them. The X3 35i is seriously fast for an SUV, and well, a Porsche is a Porsche.

Do what makes you happy, you only live once.

bigred77
Posts: 1913
Joined: Sat Jun 11, 2011 4:53 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by bigred77 » Wed May 10, 2017 6:06 pm

We have 2 BMWs in our household, 9 and 10 years old, both over 100k miles.

Maintenance and repair costs have been more than our previous VW and Toyota but it not by much. Tires have been the same, oil changes are 100 instead of 30 bucks, batteries have been more, we have to replace an occasional actuator or some other minor part but having an independent mechanic that I trust has made the whole experience well worth it. These costs are overblown quite a bit on these forums (I am knocking on wood so hard my knuckles hurt :mrgreen: ).

When our 3 series and X3 die I fully expect to replace them with a 5 series and a X5 (hopefully we can get 3 more years out of them). Will definitely buy 3 years old, 30k miles more or less, CPO.

If our household income was 300k+ I would be looking at the Porsche's, never mind BMWs. If I had 4 kids that mike change my thought process. I'd probably look at even bigger cars like a Q7, Suburban, and/or Escalade.

gr7070
Posts: 172
Joined: Fri Oct 28, 2011 10:39 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by gr7070 » Wed May 10, 2017 9:17 pm

jlcnuke wrote:I'd disagree that giving away money is financially "good".
One learns a fair amount about themselves with regard to money when they give some of it away.

Being good for you financially doesn't have to mean amassing more. However, giving away some may also lead to change spending habits or work habits or simply life habits which could ultimately result in greater financial wealth.

Give your money, give your time, gain far more in return.

User avatar
topper1296
Posts: 496
Joined: Fri Apr 03, 2009 10:50 pm
Location: Nashville TN

Re: Buying a luxury car (how dumb would it be to do this?)

Post by topper1296 » Wed May 10, 2017 10:12 pm

I haven't read all of the other replies, however I kinda went the other way. I went from an Acura to a Subaru and have no regrets.

emoore
Posts: 333
Joined: Mon Mar 04, 2013 8:16 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by emoore » Wed May 10, 2017 10:24 pm

jlcnuke wrote:
gr7070 wrote:Are you giving a reasonably large amount to charities? I wouldn't be spending $60k on a car unless I was already giving a serious chunk of money annually to worthy charities.

Something to consider before dropping a large amount on something like this.
I think it's great that you're apparently very philanthropically motivated, but that's a personal choice and not something the OP mentioned as one of their priorities.
Exactly. Telling someone to give to charity instead isn't very helpful or very respectful of what they want to do with their money. It's their money, not yours so they can do whatever they want with it.

IvestForEngineers
Posts: 9
Joined: Sat Apr 29, 2017 11:11 am
Location: Seattle

Re: Buying a luxury car (how dumb would it be to do this?)

Post by IvestForEngineers » Wed May 10, 2017 11:08 pm

I think you should go for it ..After long and hard thinking - we ended up buying Audi Q7 for 65K ..No regrets at all.

Your family and our family finances are very similar .. we both together make 400K ( tech sector ) - although our jobs are not as secure as yours.
We probably save 100K in tax deferred and another 100 in taxable ( roughly).

gr7070
Posts: 172
Joined: Fri Oct 28, 2011 10:39 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by gr7070 » Thu May 11, 2017 8:03 am

emoore wrote:
jlcnuke wrote:
gr7070 wrote:Are you giving a reasonably large amount to charities? I wouldn't be spending $60k on a car unless I was already giving a serious chunk of money annually to worthy charities.

Something to consider before dropping a large amount on something like this.
I think it's great that you're apparently very philanthropically motivated, but that's a personal choice and not something the OP mentioned as one of their priorities.
Exactly. Telling someone to give to charity instead isn't very helpful or very respectful of what they want to do with their money. It's their money, not yours so they can do whatever they want with it.
Except I didn't do what you claim I did. I stated what *I* would do. I also didn't state they should give to charity "instead" I stated they should *consider* giving to charity if they're going to buy such an expressive car.

The OP *asked* us what they should do with their money! Somehow you're upset? I guess that's what you take offense with, that i only said what *I* would do???

Some of y'all crack me up. I'm certain the OP can handle a simple suggestion to reevaluate their giving.

wfrobinette
Posts: 522
Joined: Fri Feb 20, 2015 3:14 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by wfrobinette » Thu May 11, 2017 8:09 am

aristotelian wrote:At your income level your savings rate is not very high. Unless you are leaving out IRAs and brokerage accounts, you are nowhere near financial Independence. Until then, I would hold off.
He said he was putting over 90k/year away. Nearly 30% of his income.

ray333
Posts: 177
Joined: Thu Mar 09, 2017 8:47 am

Re: Buying a luxury car (how dumb would it be to do this?)

Post by ray333 » Thu May 11, 2017 8:25 am

Live life, Get something nicer than BMW

inbox788
Posts: 4142
Joined: Thu Mar 15, 2012 5:24 pm

Re: Buying a luxury car (how dumb would it be to do this?)

Post by inbox788 » Thu May 11, 2017 11:40 am

bigred77 wrote:If our household income was 300k+ I would be looking at the Porsche's, never mind BMWs. If I had 4 kids that mike change my thought process. I'd probably look at even bigger cars like a Q7, Suburban, and/or Escalade.
In some parts of the country, that might be considered middle class. And there are folks more restrictive and extreme when it comes to buying cars. At that income level, they would barely let you buy a mid-sized sedan like a Ford Focus.

Feds: $100,000 ‘Low Income’ In Parts Of Bay Area
http://sanfrancisco.cbslocal.com/2017/0 ... ounty-hud/

Cost of car compared to Gross Income
viewtopic.php?f=11&t=141510

Luxury cars are 10% transportation, 90% entertainment.
livesoft wrote:
tomservo14 wrote:In general, I'm curious how people figure out future college costs. I did some back of the envelope calculations.
[...]
In general, how do folks balance out saving for the future vs figuring out how much you can pay while the kid is actually in college? Maybe this is the subject for a different thread....
This is an easy calculation. Basically, universities cannot charge more than people can pay, but they try to charge right up to the limit of having families shift food money to university money. So the annual cost of college is equal to the limits of a dual-income family shifting all their 401(k)/403(b)/Roth IRA contributions to zero and sending them to the university instead. So for a pair of 50 year-olds in 2017, that's $24K + $24K + $6.5K + $6.5K = $61K a year. These numbers will go up. Any difference between this number and something published is either meaningless or covered by having the student work in high school, in college, and/or beyond.

Of course, most students pay much less than this. In Houston, for instance, one can live at home and go to the University of Houston for less than $10,000 a year.
A little OT, but colleges can charge a whole lot more. It's not just an annual budget, but a lifetime budget. If you have a $200k sports car in the garage, they can make you choose to give it up. And if you don't have one, not to buy one. To make it more realistic, how does having $5000 in 529 alter the math? What if 529 averages grew to $50,000? Couldn't colleges charge more? And while balances in retirement accounts are protected from bankruptcy or other claims, nothing stops colleges from "allowing" you to borrow against them or you other assets (i.e. HELOC) to pay for tuition. The availability of student loans has in part been what causes tuition to go up. The extra funds may have made the education better and more accessible, but the costs are now being borne out by the borrowers. So it's not 4 years of payments, but 18 years of savings, 4 years of college, and an eternity paying back student loans.

Post Reply