Spending Money to Repair Older BMW’s-90 and Newer Up to ’03 vs Buying a Used Later Model

Is it cheaper to buy a used BMW or a new one? Doing some web searching I learned that cars depreciate 20% off the lot in addition to an annual 7-12% depreciation.

It seems that biggest thing to take into consideration here are the repair costs. These costs typically start after the new car warranty expires. So let’s say that your bumper to bumper warranty expires after 3 years, now you have to start paying repair bills.

Let’s begin the repair/maintenance costs at year 4 which would mean that your repair costs would run on average of $324.

Buying this new car every 5 years would result in a total cost of (not accounting for financing charges) $39,395.

Buying this car once it’s 2 years old for around $13,000 (after small dealer markup) and keeping it for 5 years then buying another 2 year old car for another 5 (for a total of 10 years of driving):

• Purchase price - residual value @ year 7 + repair costs (from years 2-7)
• $19,406 - $12,422 + $3,040 = $10,024 x 2 = $20,048

It seems that purchasing a used car every 5 years would be less expensive than purchasing a new car every 10 years. But please take into consideration that these calculations are not absolute.

I think the biggest issue with new cars is the massive depreciation after the first year. If you are a new car person, why not buy an “almost new” car that is one or two years old? At least that way you still get the new car feel, the warranty is still good, AND you don’t have to pay for the 30% depreciation that comes with the first 2 years.

But depreciation isn’t the only thing to look for, one of the things that we keep seeing is people with average means purchasing a '02, '03 745's for 20k to 30k and thinking they got a great deal. The cars sold for 75k and up new. The problem occurs when something goes wrong with these cars. Keep in mind these cars have usually only been serviced at the dealers under the free service while under warranty plan, (oil changes at 15 to 20 k miles etc.) A $5000 repair bill is very common and not just once but year after year. Not a good thing! The lower priced 1,3 and 5's are less complicated, have less depreciation and less to go wrong. So do your homework before purchasing a used BMW and make sure that it truly is the better value.