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      06-25-2019, 06:13 PM   #1
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Thought process when looking to trade up?

So I currently have a 2018 X1 and I'm in no rush to move on from it but I started browse the build your own BMW website and got the itch to explore new options.

Of course there are people out there who simply say, I want it because its new and I'm going to get it no matter what and while I respect that, I personally need it to make SOME financial sense.

So this car is currently being financed. Just curious what are some of the check points and calculations you guys do when looking to see if it's worth selling and moving on to something new? For example not sure if this is even a valuable benchmark worth using but say I bought the car for $50K 20 months ago and I'm reselling it for $40k now, I essentially depreciated it by $500/per month. And for example if a lease on that car would have been $550/month could I then consider myself in the green since I'm ahead of what the lease payments would have been and also getting out 16 months early of a standard lease?

Not sure if that calculation even makes any sense but essentially that is what I'm trying to get at. Any insight would be not only helpful but also interesting to see how people run these numbers and their thought process.

Last edited by yeezy; 06-25-2019 at 06:38 PM..
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      06-25-2019, 07:45 PM   #2
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Selling a recent model financed vehicle means you pay the most depreciation of any owner, plus finance charges (interest). I don't see the wisdom.

Have you considered owning the vehicle for 10-15 years and high mileage? That is a better financial option.
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      06-25-2019, 07:50 PM   #3
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100% agreed that’s for sure the best financially sensible decision. And with that being the case I’ll probably end up holding it for a few more years at a minimum just so I can spread the first years depreciation over a few more years.

But with that being said, are there any returns calculations people look for if they do sell early?
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      06-25-2019, 07:55 PM   #4
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I buy stuff about a year old and keep it for about 10 years after that. Let someone else take the initial hit and then I drive it a long time so that in the end the average monthly loss isn't too significant. But - I can handle having a car 10 years.

And yeah, you're justifying what you want to do. If you can afford it go for it. If not or it's questionable (let's say you don't already have your 401k and Roth maxxed and some other savings going on as well (or, if you're retired or something)) then I'd say keep it and quit daydreaming for at least a few years.
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      06-25-2019, 08:07 PM   #5
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The tax cost is a big thing between leasing and buying. A buyer pays full tax on the cost of the vehicle. A lease option allows you to only pay the tax on the depreciation amount. There are some ways around though. If you trade a car in to then purchase a new vehicle you pay tax on the difference. The downside to that is you will always get more selling a vehicle privately. Alot to think about.
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      06-25-2019, 08:42 PM   #6
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Originally Posted by BMWModel3 View Post
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Yeah probably the better option if you go in expecting to flip within a few years especially with BMW lease offers but let’s preferably not turn this into buy vs lease

Granted when I bought this my mindset was to keep it til I ran it into the ground plus I had 0% APR with a fleet discount.
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      06-25-2019, 09:00 PM   #7
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While the argument for keeping a vehicle for a long time and running it into the ground, seems like it make economic sense at first pass, I personally would never risk this with a BMW. I bought a 335i in 2009 and I loved it so much I wanted to do just that - hang on to it long term. The car was upgraded with Dinan chip and exhaust, and was very maintained by a very good garage. I had the oil changed every 5000 with synthetic and performed all the routine maintenance and had extra things done to keep the car pristine.

I eventually traded the car in 2017 for an M240 with about 120k miles on in, but I honestly think I kept it far too long. The car cost me thousands every year once out of warranty, replacing things because of the poor quality of BMW Engineering on the car. FOr example I think I had 4 or 5 maybe more (??) high pressure fuel pumps, the first 2-3 were under warranty, but the rest on my dime. THe turbos also needed replacing because a part was wearing a hole in them, losing boost... I think it was the blowoff mechanism that uses an arm that wears a groove in the turbo body.... anyway, I had pages and pages of receipts for work most of which coincided with the end of the warranty at 50k miles. ( I am sure BMW do a thorough ROI on how long to cover under warranty, and things start going wrong soon after - you start paying out at 55k)

The lesson I learned is that although I love the way BMWs drive, the engineering is not as strong as it used to be, and I would be reluctant to keep a BMW into its old age, the way I did with my 335. 120k miles on the clock is not that much by modern standards, but I would say that I was paid about 8k for fixes the last year of ownership and Sevaral thousand for the 2 or 3 years prior, and the economics of that don't make any sense vs a car payment.

Because I LOVED that 335 I keep thinking - if I just spend a bit more on this 'one thing' then it makes sense to keep it another year.... the cost of fix X being better than that car payment if I buy a new car at 50k plus....However, there was always another thing, particularly once I got close to 100k miles, and so my 335 simply become a money pit and it never paid me back.

I am having an ongoing love affair with my 240, which also has Dinan Tune and CAI, and I feel that engineering on these cars is better than the 335 - for example it uses zero oil, whereas the 335 sucked Mobil 1 down like whiskey at an Irish wake from week one.... I am also lucky in that I now work from home, so my mileage is lower, but I still wonder how long to keep this car once it goes out of warranty.... if it starts costing big bucks, I will probably trade it vs risking the doubling down on a losing hand I did in the 335...
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      06-26-2019, 07:54 AM   #8
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Originally Posted by Britbimmer View Post
The car cost me thousands every year once out of warranty
This is a valid consideration. My experience, small sample size of course, has been the opposite. But I don't put many miles on my cars, just a couple thousand a year on each of the 2 of them. That might make a big difference? My maintenance costs have been just that, I've not needed any repairs.
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      06-26-2019, 08:21 AM   #9
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Originally Posted by Britbimmer View Post
While the argument for keeping a vehicle for a long time and running it into the ground, seems like it make economic sense at first pass, I personally would never risk this with a BMW. I bought a 335i in 2009 and I loved it so much I wanted to do just that - hang on to it long term. The car was upgraded with Dinan chip and exhaust, and was very maintained by a very good garage. I had the oil changed every 5000 with synthetic and performed all the routine maintenance and had extra things done to keep the car pristine.

I eventually traded the car in 2017 for an M240 with about 120k miles on in, but I honestly think I kept it far too long. The car cost me thousands every year once out of warranty, replacing things because of the poor quality of BMW Engineering on the car. FOr example I think I had 4 or 5 maybe more (??) high pressure fuel pumps, the first 2-3 were under warranty, but the rest on my dime. THe turbos also needed replacing because a part was wearing a hole in them, losing boost... I think it was the blowoff mechanism that uses an arm that wears a groove in the turbo body.... anyway, I had pages and pages of receipts for work most of which coincided with the end of the warranty at 50k miles. ( I am sure BMW do a thorough ROI on how long to cover under warranty, and things start going wrong soon after - you start paying out at 55k)

The lesson I learned is that although I love the way BMWs drive, the engineering is not as strong as it used to be, and I would be reluctant to keep a BMW into its old age, the way I did with my 335. 120k miles on the clock is not that much by modern standards, but I would say that I was paid about 8k for fixes the last year of ownership and Sevaral thousand for the 2 or 3 years prior, and the economics of that don't make any sense vs a car payment.

Because I LOVED that 335 I keep thinking - if I just spend a bit more on this 'one thing' then it makes sense to keep it another year.... the cost of fix X being better than that car payment if I buy a new car at 50k plus....However, there was always another thing, particularly once I got close to 100k miles, and so my 335 simply become a money pit and it never paid me back.

I am having an ongoing love affair with my 240, which also has Dinan Tune and CAI, and I feel that engineering on these cars is better than the 335 - for example it uses zero oil, whereas the 335 sucked Mobil 1 down like whiskey at an Irish wake from week one.... I am also lucky in that I now work from home, so my mileage is lower, but I still wonder how long to keep this car once it goes out of warranty.... if it starts costing big bucks, I will probably trade it vs risking the doubling down on a losing hand I did in the 335...
If you can't work on your car running it to the ground method gets a bit expensive as well.
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      06-26-2019, 02:08 PM   #10
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Quote:
Originally Posted by Britbimmer View Post
While the argument for keeping a vehicle for a long time and running it into the ground, seems like it make economic sense at first pass, I personally would never risk this with a BMW. I bought a 335i in 2009 and I loved it so much I wanted to do just that - hang on to it long term. The car was upgraded with Dinan chip and exhaust, and was very maintained by a very good garage. I had the oil changed every 5000 with synthetic and performed all the routine maintenance and had extra things done to keep the car pristine.

I eventually traded the car in 2017 for an M240 with about 120k miles on in, but I honestly think I kept it far too long. The car cost me thousands every year once out of warranty, replacing things because of the poor quality of BMW Engineering on the car. FOr example I think I had 4 or 5 maybe more (??) high pressure fuel pumps, the first 2-3 were under warranty, but the rest on my dime. THe turbos also needed replacing because a part was wearing a hole in them, losing boost... I think it was the blowoff mechanism that uses an arm that wears a groove in the turbo body.... anyway, I had pages and pages of receipts for work most of which coincided with the end of the warranty at 50k miles. ( I am sure BMW do a thorough ROI on how long to cover under warranty, and things start going wrong soon after - you start paying out at 55k)

The lesson I learned is that although I love the way BMWs drive, the engineering is not as strong as it used to be, and I would be reluctant to keep a BMW into its old age, the way I did with my 335. 120k miles on the clock is not that much by modern standards, but I would say that I was paid about 8k for fixes the last year of ownership and Sevaral thousand for the 2 or 3 years prior, and the economics of that don't make any sense vs a car payment.

Because I LOVED that 335 I keep thinking - if I just spend a bit more on this 'one thing' then it makes sense to keep it another year.... the cost of fix X being better than that car payment if I buy a new car at 50k plus....However, there was always another thing, particularly once I got close to 100k miles, and so my 335 simply become a money pit and it never paid me back.

I am having an ongoing love affair with my 240, which also has Dinan Tune and CAI, and I feel that engineering on these cars is better than the 335 - for example it uses zero oil, whereas the 335 sucked Mobil 1 down like whiskey at an Irish wake from week one.... I am also lucky in that I now work from home, so my mileage is lower, but I still wonder how long to keep this car once it goes out of warranty.... if it starts costing big bucks, I will probably trade it vs risking the doubling down on a losing hand I did in the 335...

Thanks for the insight. In many ways I was trying to figure out a tipping point of when getting a new car particularly getting out of my x1 would be a justifiable financial decision and your post hit it well.

It seems like the tipping point in the calculation is really occurring sometime around year 7 right when you see signs of significant out of warranty repairs yet there is still enough meat on the car to fetch a decent resale price.

I'd like to think that even if money was not an option it's important to be pragmatic and be somewhat financially responsible when making these decisions. I mean i know someone is going to come in an say why not just buy a $10k used japanese car then that will be the best bang for your buck in terms of getting you from point a to point b. More so my point of view is, how can i best make the math work best without removing BMWs cars in that similar price range from the equation.
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      06-26-2019, 03:58 PM   #11
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Yeezy, yes I would agree that the tipping point is probably somewhere around 5 and 7 years and probably 80k miles or so. The trap I fell into was that I knew I would have some extra expenses after I left warranty, and it seemed like a bunch of things came up at 55k for example, but then you feel like you want to get your money back on what you just spent, and that probably means another 6 months to a year of ownership, and then something else goes.... so you get stuck in the ROI loop...Replacing the twin turbos really killed my enthusiasm, costing about $5500 all in, and I really feel that was because of a poor design, not reasonable wear and tear. The other annoying thing about that is that I reported a rattle many times to my dealer and they told me it was just the exhaust valve... in reality it was the turbo wearing a hole in itself, that was the rattle. BMW extended the warranty on the turbos I think to 80 or 90k as a result if this known issue, and had the dealer spotted it, I would have been covered, but it wasn't found until Too late...
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      06-26-2019, 04:33 PM   #12
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I always just look at the cars cost, then the expected depreciation based on mileage per year, and what I will sell it for. Any new BMW is going to hurt you a lot. Even leasing gets expensive when you factor in the overall cost AND the fact you wont even own the car at the end of it.

I just checked BMWs site on 2019 M4 leases. 4500 down and 800 a month lol. all in you are paying. 32000 all in over 36 months (yes yes I know there are discounts etc). then then the dealer takes it back. you lease another M4 for the same amount. Now after 6 years you have paid 64000, and don't own anything.

Buy a used 2015 M3 for 45000. drive it for 3 years. The car will probably still be worth low 30s at minimum and guess what? you own the car. Even if a turbo blows and costs 5000, you will still be ahead.

Here in Missouri you get a tax credit on trade in too.. so if I trade in to a 2018 CS in a few years, I will only be taxed on the difference (M3cs price - sale price of my base M3).
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      06-26-2019, 06:22 PM   #13
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Quote:
Originally Posted by Britbimmer View Post
Yeezy, yes I would agree that the tipping point is probably somewhere around 5 and 7 years and probably 80k miles or so. The trap I fell into was that I knew I would have some extra expenses after I left warranty, and it seemed like a bunch of things came up at 55k for example, but then you feel like you want to get your money back on what you just spent, and that probably means another 6 months to a year of ownership, and then something else goes.... so you get stuck in the ROI loop...Replacing the twin turbos really killed my enthusiasm, costing about $5500 all in, and I really feel that was because of a poor design, not reasonable wear and tear. The other annoying thing about that is that I reported a rattle many times to my dealer and they told me it was just the exhaust valve... in reality it was the turbo wearing a hole in itself, that was the rattle. BMW extended the warranty on the turbos I think to 80 or 90k as a result if this known issue, and had the dealer spotted it, I would have been covered, but it wasn't found until Too late...
Agreed, the real key is to not get caught in that vicious cycle of making the expensive repair and holding on until you get some sort of ROI on the repair item. You probably get a better ROI selling it at that point before the next thing falls apart.

I think it's also finding out the tipping point of not just repairs racking up but also value dropping substantially on a resale. Has anyone seen that after a certain point the value just drops off a cliff? I would say 100k miles as a benchmark but not sure if that is even applicable. So looking at it from both angles.
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      06-26-2019, 09:36 PM   #14
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Do a 10 year analysis.

Leasing for 10 years, or purchasing a new vehicle every 3 years is an easy calculation, as it relates to depreciation and financing cost. It's safe to assume the vehicle is always under warranty, so therefore no repair cost, other than oil/filters, tires, brakes, etc.

For the purchase outright, and hold for 10 years, the depreciation and financing cost (if any) is easy to calculate. The out-of-warranty repair cost is hard to estimate. Need to have a feel for it, based on experience.

DIY is a big part of owning a vehicle to old age and high mileage. I have done many repairs myself, but also have had the dealers do a bunch.

Pre-2005 (approx) Toyotas, i.e. RAV4 and 4Runner, will literally run forever if the maintenance is done. I ran a 2011 VW Touareg to 238k and it was great. Lots of diesel related repair cost but so what. Even mid-2000s Nissans can be run to 200k when keeping up on maintenance.

I have run other vehicles over 200k miles and 14+ years. It's a good financial equation, mainly if you DIY.

I am not concerned about running the G01 X3 xDrive30i to high mileage. The B48 engine has been around for a few years, and does not have radical technology. Direct injection, turbo, and 0.5 liters per cylinder is a low risk configuration. The ZF 8HP is a stellar gearbox. The unknowns for me are the instrument panel electronics, including iDrive. And body related items like the pano roof, electric seats, and other gadgetry.

Looking forward to the journey!

p.s. Agree with the comment that if you want to buy a new car, buy a new car. But don't fool yourself into it by coming up with a calculation that says you "should" do it.

Last edited by chassis; 06-26-2019 at 09:43 PM..
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      06-27-2019, 11:49 PM   #15
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Quote:
Originally Posted by yeezy View Post
So I currently have a 2018 X1 and I'm in no rush to move on from it but I started browse the build your own BMW website and got the itch to explore new options.

Of course there are people out there who simply say, I want it because its new and I'm going to get it no matter what and while I respect that, I personally need it to make SOME financial sense.

So this car is currently being financed. Just curious what are some of the check points and calculations you guys do when looking to see if it's worth selling and moving on to something new? For example not sure if this is even a valuable benchmark worth using but say I bought the car for $50K 20 months ago and I'm reselling it for $40k now, I essentially depreciated it by $500/per month. And for example if a lease on that car would have been $550/month could I then consider myself in the green since I'm ahead of what the lease payments would have been and also getting out 16 months early of a standard lease?

Not sure if that calculation even makes any sense but essentially that is what I'm trying to get at. Any insight would be not only helpful but also interesting to see how people run these numbers and their thought process.
I have car ADD and this is why I lease. Getting out of a financed car is almost always going to put you significantly in the red. That being said, only you can say if it's a good idea to take a hit to get into a new car because only you can say what you can and can't afford and how much that privilege is worth to you.

BUT, if you had leased that X1 for a good price with zero down, it is almost a no brainer. The cost of getting out of the lease and having it transferred is fairly easy for a desirable car. The only cost you would eat is the doc fee and registration unless you ask the new owner to help pay for it.
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      06-28-2019, 02:04 AM   #16
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If you can afford it, do it.

Simple as that.

I'll be in that position in 2-3 years, ready to buy an F80 M3, build some equity in my F30 and trade it in. For now, its simply my commuter car.
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      06-28-2019, 05:04 AM   #17
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I've always used a very healthy dose of "man maths" when it comes to the switch from one car to another - but as my wife says "at least thats your only expensive vice"

I just moved from a 4 year old M135i - which i'd taken to the dealer for a vehicle inspection and brake fluid change.

The price to re-extend the warranty, add a new service pack, and do the MOT - just seemed like money thrown at an oldish car. Had a quick test drive of an X3 M40i - realised it was fantastic - so gave the sales guy some numbers to aim for - told him I could move immediately if he could do a deal - and waited for his call.

Month end rapidly approaching - and he wanted a sale - so gave me a great deal.

Its more money than I was paying before on PCP - but not that much more - and the man maths closed that gap for me

Definitely echo the above - if you can afford it - will enjoy it - and have pushed the sales people really hard to get a good price (but not so hard that they don't want your business) - then go for it.
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      06-28-2019, 05:54 AM   #18
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If you’re thinking of buying and selling often but more concerned about the TCO, sticking with a Toyota is likely your best bet. Unless you’re totally loaded like Zuckerberg, money will be a consideration during any trade up process.

I try to justify it like this: I don’t really have any other vices (don’t smoke drink or pay for hookers and blow). I am financially at a point where I can drive and own some of the cars I’ve always wanted. With that said, I don’t try to lose my shirt when trading and I try to get a good deal on the purchase. Sometimes that means waiting for over a year waiting for the right timing, deal or scenario. Cars are a depreciating asset 99% of the time. I think as long as you understand that before you go in, then AFAIC, it’s your money and it can fit into your budget without sacrificing your future then you should spend it on what makes you happy.
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      06-28-2019, 08:39 AM   #19
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Yeah, I mean besides trying to do the man's math and make the numbers fit the situation. I was also trying to figure out if there's a drop off point for the depreciation at any given time (aside from the first year when of course the biggest depreciation occurs). And even though I'm in year 2, just forecasting ahead to time that drop off point well. But for the most part it seems like you guys are all seeing relatively straight line depreciation.

I guess part of my initial question is, when do you guys see these cars take the biggest hit of resale value? (aside from year 1).
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      06-28-2019, 11:13 AM   #20
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Anecdotally, I have always struggled to sell or trade my second hand low mileage car for what they are worth according to the book. This means that I am usually selling or trading under what the residual would be had I leased. By extrapolation that means I lost more money than I would have spent on a lease.
For example selling a 2 year old Audi S4, or my then 2 year old Z3 2.8 I found I could just not get the value I expected selling privately or trading, despite perfect condition, all the service records, extra oil changes etc... maybe I am just a crap negotiator....!!?

That said, despite the evidence, I haven't leased because some part of my brain likes the idea of 'owning' the car, even though for most if it's life, the banks really owns more than you ! Plus I like doing tunes and exhausts and sound system upgrades, so I want to own...
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      06-28-2019, 11:43 AM   #21
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Vehicle value, which is purchase price minus accumulated depreciation doesn’t drop off a cliff at a point in the future, assuming proper maintenance and no value impairment incidents (flood, fire, significant collision).

Depreciation in Year X is always more than it is in Year X+1. That’s how it works.

Selling recent model vehicles sequentially is a guaranteed way to have the highest total cost of ownership. It may, on the other hand, be the most fun option.
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      06-28-2019, 11:50 AM   #22
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The best time to sell a BMW is when the mileage is < 50K and still under warranty.

Check the BMW web site and study the prices asked and milage, this should provide an informed opinion.

When financing, I have found that at ~5 years. That I can purchase another car, pay off the old car, have a few thousand in equity to put toward the new car and save on sales tax. Win, win, win. If the financing > 5 years, e.g. 7 year loan monthly payments ~= lease payment.

The problem I have had with running the car into the ground (~120+) is thinking I will keep the car, I end spending a few thousand to fix things then the next expensive thing comes up a few thousand miles or 1 year later and I end up say enough is enough and sell wishing I had sold sooner and pocketed the few thousand in previous repairs. It's like trying to time the stock market. It doesn't work.

Last edited by omasou; 06-28-2019 at 12:02 PM..
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