[shivaswrath]

can't you look at lease residuals to see what BMW thinks?

[zer0cool]

You are getting a very partial picture from your friend:

1. You can't really buy pretty fresh models (5 or less years) and hope to sell for 95% (I mean even on older models it's hard, assuming both private party transactions; really only possible on very low mileage cars in excellent condition, assuming you keep the condition and don't put many miles [and on cars like a Lambo or a 911 turbo, just 300 miles per month will affect your resale significantly, since so many have such low mileage] on the car).
2. Tax considerations.
3. Bid-ask spread.

The fact is that a car is a quickly depreciating illiquid asset. The combination of the factors above will likely result in financial ruin assuming you don't have hella cash. Moreover, these cars are incredibly expensive to insure and maintain, and let alone fix.

So let's assume the best case scn and say you can somehow sell at 95%. That's likely to a private party, since bid-ask spread is likely 15+% car these kinds of cars if you sell to dealership. So thus you end up paying full tax on your new car every time. Well if on the other hand you sell to dealer so you only pay tax on the diff in some states... be prepared to pay that bid-ask spread, which most likely exceeds tax.

Oh and just imagine if you scratch the curb with the low low bumper of that super car... your insurance will go up the wazoo and your resale... well...

Oh and if you do want to do private sale both sides (buy and sell), be prepared to spend a LOT of time searching for cars to buy (you ll need to ensure excellent condition, etc, basically having to travel to see cars) and trying to find customer to buy from you (not that many).

So yes you do save a lot on deprecation if you buy expensive cars pre-owned. However switching one up every 8 months is expensive no matter how you do it.

You do it because you have the cash and want a bunch of great cars. You don't do it because it costs about as much as a 435 (it costs shit loads more).

[zer0cool]

Upon further thought, either your friends have tons of money and have no idea how much they are spending or they are total financial illiterates and are on their way to financial ruin (or both).

Financing an expensive car at 84 months with the goal of minimizing total cash flow is CRAZY due to both higher interest rates at longer loans, and also the fact you pay almost no principal off in the first year on a 84 month loan as other posters pointed out... So basically when you sell you car, even say at the highly unrealistic 95% of purchase value, you don't recover anything to your monthly payment, since the selling price barely covers (if that) your principal; and that's assuming you are selling at an unrealistic 95%... So you ve basically spent a few months paying interest on a huge loan and have to then cover the depreciation as well...

When you add in financing charges, you are just adding losses to losses...