Strategy for DD sedan purchase - 25K+ miles a year

My current DD is a 2012 Sonata Limited with about 90K miles on it, bought slightly used. I’m thinking about whether I should drive this until its close to dead or do something else. I probably have about $7K equity in it considering what’s left on the loan.

I need a DD sedan with car seat space that does 25K miles or more a year, 90% of that is highway to and from work after kid drop off. I need something reasonably new, appropriate to take to a business meeting and/or have a client ride in (although rare) and substantially reliable – I don’t’ have time for repairs/tinkering on my DD. It has to be able to handle some snow for the commute, which front wheel drive and all seasons have been fine for.

Past strategy has been to buy very low mile used or new, and drive it until its well paid off but there’s some reasonable value left for trade or sale before the point reliability becomes a real concern. I’m wondering if I’m employing the right strategy to meet my needs as reasonably inexpensive as possible, or if there is a better strategy.

Ignoring some or most of my needs and common and financial sense, I’d daily a 2015 mustang V8 variety, or a new 3 series BMW. This isn’t so much of a what car thread as a what purchase strategy thread. I can’t do the lease a car/write off as a business expense arrangement as I’m just an employee.

For frame of reference I’d be unlikely to choose a Civic or Accord or Camry or MINI Clubman or a Focus ST or a Prius or a P71 or mint 1989 Olds Cutlass. The only alternative strategy I’ve considered is try to land on something already significantly depreciated from new car price, drive for 2 years, add 50K miles, and turn it into the next one with ideally minimal loss in value.

Looking at one example yielded the possibility that I could grab a 2012 BMW 328 with 18K miles on it for $24,000, sell in 2 years with 70K miles for maybe $18,000? Ignoring interest and the value of vehicle equity, that’s $250/month. Not the cheapest commuter I could have, but not bad. I don't know if I'd go with AWD or just RWD and snow tires. I’d be concerned about landing on one with 100K miles and adding the next 50K miles, realizing that buy in would be much less, but risk of maintenance would be significantly higher.

I’d appreciate any other strategy anyone has employed while in my shoes, or if you have any ideas I’m missing. FYI our other main car is a 2015 Explorer, which replaced our 07 Explorer, which is my wife’s DD and our trip vehicle. Thanks.

I was in your position in the late 90's. My strategy then was to buy Hondas off-lease. That means they were about 3 years old and had about 36k miles. I would then take them up to about 80k miles and offload them.
On a '95 Civic EX this meant that in 18 months of ownership, the car sold for $1,800 less than what I paid for it. I figured $100 per month of ownership was a good deal. I then did same with similar results with '97 and '99 Accords.

You may not like the answer...you actually already said you wouldn't...but the "best" answer here is Prius. I'm in a similar situation. I'm about to start a job where I'll be driving 30k miles a year, easy. I tried a Prius earlier, and while it's the right answer financially and logically, it wasn't right for me. At the moment I have an '09 HHR that I picked up real cheap. For that reason, I'm planning on just driving it for a while, though my plans are subject to change. Beyond that, you have to decide if you want logical (Civic, Corolla,) or say berkeley it and just beat a fun car to death and lose your shirt in depreciation.

I think that you have the right approach. While you are driving in essence an appliance rather than a fun car, your daily driving routine would not be any better in a fun car. You need comfortable seats, a good sound system and a good AC system. Anything more is just a waste IMO.

You have a 3 year old Hyundai with only 90k miles. Is there a reason this car doesn't meet your needs? Late model Hyundai's are pretty bulletproof, just stick to the factory maintenance schedule and drive to 200k miles...

Unless you have a lemon I doubt that car is going to nickle and dime you to death.

I have a 5 year old Hyundai with 130k miles. Have to sell it because I bought a larger car but it runs like new, would not hesitate to drive anywhere. If we didnt have a kid on the way and it wasn't a small hatchback I would keep driving it.

JohnRW1621 wrote: I was in your position in the late 90's. My strategy then was to buy Hondas off-lease. That means they were about 3 years old and had about 36k miles. I would then take them up to about 80k miles and offload them.

This sounds like a good strategy. Buy after the first large depreciation hit and unload it before the next one(100K miles). Keeps you in a fairly new and probably reliable car with minimal expenditure.

In reply to failboat:

The Sonata still meets my needs, well actually, and should do so for at least another 2 years, maybe 3, then I'll need to do it again. Frankly I don't feel bad when it gets stone chips or doesn't get washed as much as it should. I'm just pondering on different approaches that might yield a more fun vehicle and/or better economics, without trying to find the cheapest way I can get to work.

For example, quick math says I'll more or less kill, what, $24-26K or so in value in about 6 years in the Sonata. For that BMW example, I'd kill $18,000 in value for that time frame, driving what I would say is a much better car, with probably low downside to doing so. The rest could go to college fund, another toy, whatever. Two cycles of that and I'd probably easily pay cash + trade for the next car, vs. getting cheap financing for a nearly new vehicle that I do now.

I'm sure I'd hear from one side of my family, "Why does he need that fancy BMW?" when at least back of the envelope math suggests I'd be better off with that BMW than my current Hyundai. Now, if I tried to do the same plan flipping a slightly older Sonata every 50K miles, maybe I'd save even more - but I'm not sure the value would hold up as much. And I'm certainly not wed to a BMW as the car to drive and flip - something in that category that has a sweet spot for depreciation. That was just one example I seemed to find. I'd be interested in others.

I edited this to add - I should have mentioned leather - with kids, I won't own cloth seats if I can help it.

I was noticing I can get a 2011 BMW 335D for high teens low 20's now which I would much rather drive than your Hyundai.

On the prius front used especially how much room do they have for car seats? We ditched my wifes matrix when we had the second kid because putting a rear facing and a front facing with 2 adults in the car was not comfortable.

The other option is something like a G37 sedan. Maybe its different where you are but after 5 years and 80k miles I see BMW values go down like a rock. They really are one of the worse cars I see for depreciation at least on the lower end of the luxury scale.

I think you are a little optimistic to think you will get 18k out of a 5 year old BMW with almost 100k miles

failboat wrote: You have a 3 year old Hyundai with only 90k miles. Is there a reason this car doesn't meet your needs? Late model Hyundai's are pretty bulletproof, just stick to the factory maintenance schedule and drive to 200k miles...

It's not that they are bulletproof, it's more like they're still so crappy that they could be falling apart and you wouldn't be able to tell.

Hyundai has some weird ideas about fault tolerance.

LS4xx.

Good luck trying to put that much mileage a modern BMW w/o the regular german car 'maintenance' interfering. The depreciation on those things are ridiculous. I'd stick with what you have or get a new Mazda6. That's a reasonable fun to drive daily driveable forever kinda car.

In reply to amg_rx7:

You may be right. My BMW example was after 20 min. of online shopping. If I did switch from buying nearly new to buying off lease and flipping more frequently, I'd need to do a lot more research on values of appropriate candidates. I'm in Western PA and 18k for one with 80k miles seemed to be a fair price and not overly optimistic. I agree when you get to 100k miles the value would be less (do you still have to redo the cooling system at that mileage in newer 3 series?)

I do 50k+ a year. My strategy is to buy at the bottom of the depreciation curver, but the nicest thing I can find there (most recently 2002 protege5 with 100k, all records, original ownerr, 4000).

I then drive it until its only worth scrap price, im sick of it (camry got here) or someone wants it waymore than me (acr)

Other than normal maintenance, and minor repair, ive been doing well with this. Never spent over 10k to but a car.

Why not a lease with 25k miles included? I think you are wildly optimistic on the used price of that BMW. Let BMW finance take the risk on residual value, they are usually happy to.

However, I think your best option is to continue to drive and maintain the Hyundai.

Also, don't buy an off lease BMW. With their service intervals, the poor car would be lucky to have two oil changes in 40K miles.

Dusterbd13 wrote: I do 50k+ a year. My strategy is to buy at the bottom of the depreciation curver, but the nicest thing I can find there (most recently 2002 protege5 with 100k, all records, original ownerr, 4000). I then drive it until its only worth scrap price, im sick of it (camry got here) or someone wants it waymore than me (acr) Other than normal maintenance, and minor repair, ive been doing well with this. Never spent over 10k to but a car.

This would likely be my route.

25K is a LOT of miles to put on a car. Anything remotely new/low mileage is going depreciate so quickly you may as well stop driving and just sit at home flushing money down the toilet.

In reply to maj75:

I did the math on potentially leasing my 15 Explorer with 18-20K miles a year, and when compared to buying it at the available financing, it wasn't even close. I don't think the actual cost was twice as high to lease, but it was way more. Monthly payment was, of course, low when compared to the purchase price. But factoring in no equity and needing at least 2 leased cars/terms vs. 1 purchase, it made no sense. Leasing can make sense and I've done it before, but I doubt it under this scenario. I'd need to see/do the math. I leased a Jeep Cherokee Sport 15 or so years ago when the residual value was stupid high, and the discounted purchase price was stupid cheap, with no intention of keeping it (it was my first new vehicle) and it cost me very little to own that for the lease term.

Wildly optimistic on the initial buy price, sell price, or both? I've always liked, but never owned, a 3 series. I'm not wed to a BMW if there's a better option in that ball park. I'd think most off lease cars of any make would risk significant deferred maintenance - I'd want to have service records of anything I bought.

I've also wondered if I could establish a helpful relationship with a dealer/salesperson - find me "X", and I'll be back in 2 years to trade it and ask you to find me another "X" - rinse, repeat.

I see two options, both of which I've done with motorcycles when I had a 120mile/day commute:

• Buy a year old with financing and warranty, put loads of miles on it, lose shirt when selling after loan was paid off, partially because of the miles on the bike. And the warranty didn't help as much as expected.
• Buy slightly older with reasonable mileage, pay cash, ride for 20k-30k which was about a year, rinse, repeat. Actually ended up costing me less money in depreciation than buying newer and as I tended to ride BMW tourers it wasn't a problem selling them on with 50k miles on them.

If you already have 90k on the Hyundai, I would just keep driving it until you hit the first stupidly expensive repair.

You can try to slice it any way you want. It's going to come out the same way. If you buy anything new or nearly new, you're going to take a beating on resale when you're done with it. If it's a German car, just add maintenance costs to the resale beating. If you're OK with that, and there's nothing "wrong" with it, fantastic. If you're not, then the suggestions above are great. Grab a car that's taken a huge bulk of the depreciation hit, but doesn't have a ton of hard miles on it. That's why I suggested the Prius. They keep their value, even with very high miles.

I even considered buying a brand new Versa Note, Mirage, Spark which are the same price as some higher end cars in the sweet spot of depreciation.

Personally, if you're happy with the Hyundai, I'd keep it. You've already taken a beating on it's resale because of the miles. They're reliable, so it's got a lot of life left in it. No reason to ditch it, unless you just want something else and don't mind spending.

Used Japanese Pick your brand, model, and style then drive it forever. They're expensive used for a reason. And still worth every penny!

It sounds like you mostly have it figured out, but one strategy I've always liked in playing just a few years old, was to buy a car way below the average mileage for the year.

A car that's 3 years old but has substantially low miles doesn't usually sell at that substantial of a premium vs. cars with "normal" mileage for the year (15K+/year).

That gives you the leeway to drive it a few years until it approaches just slightly on the high side of what comparable average miles/year cars have on them, and you can unload them and rinse/repeat the process.

You're not looking for the cheapest way to drive, as you mentioned you want a modern/presentable/reliable etc. option. It's not a bad way to play a nicer car and enjoy the variety of swapping out every couple years since you have a baseline amount of depreciation you know you'll stomach buying new(ish) regardless.

While some here are too cheap, and would always drive current vehicle into the ground, there is certainly merit to recognizing the residual value, and the rapid decline thereafter as the miles accumulate into ludicrous range. FWIW I average about 35K/year.

I can go by the local markets here which is Central Texas. 24-26K gets you a 2011-2012 328I with 30ish K miles. so looking at the 2009-2010 models with 80-90K miles on them and I only saw 1 listed over 18K Retail. Most were 15-17K retail. Realistically I think a good sell out price is 14-15K private market. Maybe it's just my market but like I said 5 years old and 80-90K miles and they have lost 65-70% of the value.