24-year-old loses $30,000 on a BMW after $20K down and two years of regular payments
Jakob Jensen is a commercial fisherman in Alaska. He works about half the year out on the water via two separate fishing seasons, one that starts in January and goes to April and another from June to September. While he brings in plenty to support himself and his two sports cars, this week, he posted a reel on social media warning others about how his BMW math ain’t mathing. Turns out, owning a particular model is way more spendy than he thought.
When Jensen was 22, he secured a car loan for a BMW X3 M Competition at an initial sticker price of $56,886. For those wondering, this is a race-ready version of the automaker’s compact SUV, first released several years ago. After sales tax and fees, the out-the-door price came to $63,999. The day he made the purchase, he put down $20,000. So far, he’s made 23 monthly payments totaling $19,136.
Now, the Beemer has 17,055 miles. He’s averaging 14 mpg. Assuming $3.80/gal, he figures he’s spent about $4,630 on fuel. He pays about $130 a month on full-coverage car insurance.
He also spent $2,000 on some Michelin tires. Which might sound like a lot…and it is, but it’s an X3M Competition. Jensen didn’t even go above and beyond on his selection.
Today, he says, he can likely sell the BMW for $45,000. He still owes $27,000 on the loan. While this gives him $18,000 of positive equity, he’s already spent $48,756 on the vehicle.
Take away the equity from what he’s already spent, and he’s lost $30,756 on his purchase.
Look, not many BMW drivers are calling their purchase an investment. Like…no one.
Still, this is a pretty good lesson to younger drivers who find themselves signing up for a steeply priced luxury car because they want to look a certain way. As time passes, many feel forced to offload the cars due to maintenance costs (like two grand for tires). In the end, too, if folks visualize other goals outside of driving cars that take up their entire budget, like traveling, buying a home, or starting a family, the financial losses associated with early sports car ownership may smart much more than the joy of driving them.
At a high level, there’s nothing wrong with driving high-end, fantastically engineered sports cars. But it can become a real problem if you’re doing it without understanding the financials first.
