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I have bought a new 2015 bmw 328 in Sep 2014 for 46k on road price(Includes Tire maintenance package). BMW's 4 years free maintenance ended this month and here on wards I need to pay for service and repairs. At present it has 28K miles on the car. Car is in good condition with minor door ding. I checked KBB and its value is 19k(Trade in) and 22K(private). I still owe 9k to bank.

I do need a car for commute. My next car will definitely buy a small SUV. A decent SUV will cost 22-24K for sure.

Is it advisable to sell it off and cut my loses or keep it, as it may not depreciate so severely.

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    What is your goal? Do you want to be out of debt? Do you want to avoid having to pay repair bills? Do you want to minimize your transportation costs? – Ben Miller Sep 24 '18 at 20:33
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    Re "A decent SUV will cost 22-24K for sure." False. Of course if you want to waste your money on a new one, that's your privilege, but it's easy to find good driveable vehicles for 1/4 of that. As for the BMW, while I have no personal experience, everything I've read says they tend to need lots of costly maintenance. – jamesqf Sep 25 '18 at 4:59
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How long will it take you to pay the car off? Financially, the best course is to pay off the car loan ASAP and continue driving the car until you can trade in for another car with cash.

If you trade in now, you'll need to borrow about $10-13K, and the SUV will probably depreciate 5-10% off the bat, so your $10K of "equity" will drop to about $7-8K.

You are right that your car will depreciate much less than buying a new car, since you'll be paying for the dealar's markup. If you can get the loan paid off in the next year or so, then save enough cash for a cash upgrade, that will be the best decision financially.

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It is almost always better to keep the car you have than to sell it and buy a new one.

The depreciation is fastest on a new car, and gradually tails off as the car gets older. So if you keep trading up to new cars, you're always paying the fastest depreciation.

Financially speaking, the only time it's worth getting rid of an old car is when it makes no sense to do the latest repair. Either when the car is falling apart, or the fault that needs fixing far exceeds the value of the car.

  • But this is a BMW, so "too costly to repair" begins when the warranty expires. – jamesqf Sep 25 '18 at 5:00
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The cheapest option is to sell the car and go by foot. The next best option is a bicycle with a cost of less than a hundred. Your average speed in a city can be the same as with a car - I checked it myself. This will not only lower expenses but it will also increase your future income because both options statistically increase your life expectancy. On the weekend you can go shopping with Uber.

Considering that you previously bought a BMW, you most likely value the car experience. If you could find a good deal or can trade well, it is possible to sell a three year old model and buy the two year old model without losing money. I know one person who does this every year.

There is little value in a new car. A one year old car is almost the same as a new car but costs significantly less.

If you are really asking for investment advice, you should sell your car and buy a bicycle. A car is more a consumption. You would never buy a new financial instrument if you knew that it would lose half of its price in one year.

  • There are many places (even urban) where traveling by foot or bicycle is not a viable option. Where I live (med-large city) there is no real public transit from the suburbs to the inner city. My commute is 20 minutes by car; it would be 60 minutes by bicycle (plus showering time). – D Stanley Sep 24 '18 at 21:23
  • @DStanley Financially it is better for you to use a bike. Some people travel 2 hours to work and don't complain. I lived in a very large city where traveling by car was 30-90 minutes to work and by bike a stable 45 minutes. The question did not state any other goals than financial. Comfort was not stated as a goal. – keiv.fly Sep 24 '18 at 21:39
  • Fair enough, but I think practicality has to play some part. For me, traveling by bike would cost me 30 hours a month in lost time. Well worth the expense of a car in opportunity cost alone. – D Stanley Sep 24 '18 at 21:49
  • I agree with the idea but don't think this is a good answer. It's too hardcore for the OP and thus has zero chance of being taken seriously by him/her. – jcm Sep 25 '18 at 10:08

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