Should I Buy a BMW M4?
AN2 that’s about go transition to a PE shop as an associate. Really like cars and want a performance oriented car while I am still young and don’t have a family.
Will have about 170k saved up by the end of my analyst stint this summer.
Currently drive a Toyota that’s about 3 years old and in which I have about $5k of equity in (currently valued at around $20k and owe about 15k on it).
Currently saving and investing about 50% of my base and banked my whole first year bonus and expect to do the same this summer.
Will earn 365k as a first year associate so expect my savings to go up dramatically based on the fact that I generally live extremely frugally - only really spend money on meals outside of my rent and insurance.
Thinking about buying an M4 Comp xDrive - the one I spec’d up is about $97k and I think I can get about 10% off the sticker based on the current auto market. Call it 90k for calculations.
Car to Purchase: 90k
Down payment: 40k (have savings and don’t want to be upside down on car loan)
Trade In: $5k(this will actually go up by the time I actually writing the check)
Income: base pay of 150k
Interest: 5% (excellent credit score)
Monthly: ~$850/mo
Insurance: ~$300/mo
Total Auto Costs: 10% of gross take home pay
Financially, not really stretching myself and given how I have lived frugally overall I think I have earned this purchase plus my savings plus short term earnings (will make over 700k+ over first two years as a PE associate even if I am pushed out after that) puts me in a safe spot.
Nevertheless, want to hear opinions and see what others think - push my thesis here please.
Do it man, yolo
Based on the most helpful WSO content, here's what you need to consider:
Financial Feasibility:
Lifestyle and Priorities:
Opportunity Cost:
Alternative Perspectives:
Emotional Value:
Final Thoughts:
Your financial plan for the M4 seems well thought out, and you’re not overextending yourself. However, consider the long-term implications of this purchase and explore slightly used options to maximize value. If you’re confident in your ability to maintain your savings rate and manage potential career risks, this could be a well-deserved reward for your hard work.
Sources: First car after graduation?, MBA Costs $500,000 -- Worth It?, Buying Nice Cars as An Analyst, https://www.wallstreetoasis.com/forum/investing/tesla-q1-earnings-call?customgpt=1, Tesla Q1 Earnings Call
Bump
Expensive cars are usually a financially poor decision but YOLO if that’s what makes you happy. Just view it as an expense and not an investment.
Car loan in your position on an M4 is pretty dumb, why not just get a good used one?
I'd agree; a 2018 M4 Comp, for example is an amazing car and you could comfortably pay cash, no monthly payment will feel great and allow yourself to enjoy it more.
Also, the F82 generation M4 is better than the new G82s anyway - lighter, louder, better looking. Get a nice used one and don't look back.
Anytime I consider a purchase like that, I had an adjustment in my math for the happiness and pleasure it'll bring me.
Not financial advice :), honestly have not read your math.
Agree with the above comments. I'd also check out Bimmerpost as they have some pretty good examples of (sometimes) lightly used cars below MSRP. I purchased my F80 through the site a couple of years ago and it was pretty hassle free - I'll note that I was a couple hours drive away from the seller so it made the transaction easier but presenting an alternative if you're set on the G82.
As for your current car, you should look into selling to a carvana / car max type of place as they are quick to give you an indication of value and it's extremely easy to set up an appointment and sell your car. I sold them my old car prior to purchasing the F80 and the entire process took maybe 2 days (agree on a value, an employee checks out the car and confirms details are accurate, and then hands you a check).
Best of luck and be sure to share pics / experience when you settle on a purchase!
Go for it man, you 100% deserve it. But why not get a used one. I see G82s with around 10-20k miles for $70k. You won't hit depreciation as hard compared to buying a new one. Currently I'm saving up to get a Shelby GT500 ;)
You've done a good job on running the numbers, and are clearly in a position where you can comfortably afford the car. Whether or not you should buy the car is something I think only you can answer.
I've owned German cars (BMW, Audi, Mercedes) since my first job out of school, and as a self proclaimed car enthusiast I have taken great joy in owning a number of different fun, albeit impractical cars.
However, I have always gone pretty heavily used, as the simple truth is I would rather let someone else bare the brunt of the most material portion of the depreciation curve. This is in part due to the fact that I dont drive that much. Not sure where you are doing your PE stint, but if its LA / NYC / SF, there's a good chance you will almost never be driving. Maybe an M4 doesn't depreciate that much over a 2-3 year period if the mileage remains low, I don't know much about the G82 M4s. Still something to think about, as the F82s would come at a meaningful discount and would depreciate much less. With that said, I drove a F82 M4 for a weekend and was extremely underwhelmed, that car felt slow as shit and the handling didnt meet expectations.
The other question you should ask yourself is, do I want to own a nice car, or merely drive one from time to time? Leveraging apps like Turo could allow you to get all the joy out of owning one without spending the $$$.
I currently have an E92 M3 that I love but this car is a PAIN. I put maybe 3-5k miles on it per year because I never have time to drive it, and it takes a considerable amount of time to take it to get serviced, even just for routine maintenance. Throw in the time spent gassing it up and getting it cleaned and it feels like 50% of the trips I take in it are just to keep it maintained.
With that said, I absolutely adore my M3 and have spent a lot of time and money modifying it, and never intend to sell it, no matter how much of a pain it is.
Now, just one final question for you, why the M4?
All great points. Luckily won't be in LA / NYC / SF and in a long-distance with my gf being 2 hours away from me so definitely will be getting some good drives in.
Personally for me this will be the first "good" car I'll get and have always dreamt of getting a powerful two-door coupe - I wouldn't necessarily call an M4 cheap but also not super expensive (compared to porsches, etc.). M4 comp xdrive with its 523 HP, it is more than double what i currently have, and at a 3.4-sec 0-60 it is less than half the 7.6 secs my current Toyota takes.
As for why a M4 over a M3 (even though they are identical engines / specs and M3 has more utility), this is the time I can have a two-door coupe (no kids / pets / family, hardly ever have more than 2 people in my car) and enjoy it.
I do understand the logic behind getting a used car since you can skip the depreciation up front, even more so on a G82 vs. G80, but I lose the ability to get a car that fits my specifications and with this being my first big car purchase and likely the only one for a bit, i want to make sure I get it exactly how I like it.
Unlike many others I don't really spend money on expensive watches / clothes / vacations etc. and so this is my way of getting something that gets me joy (driving / cars) and has been a bucket list item since I was young and so if I have to eat $20k of depreciation over the first year or two I am good with that.
Ok, makes perfect sense now.
Sounds like you and I are very similar, so I understand the logic.
My only recommendation would be think about a 911 or C8 or something else that might be a bit more fun for a pretty similar price point.
If you really wanted to enjoy "a coupe" youd get a mid engine Porsche 718.
Anything else is second best
I would get it, but also consider 1-2 year old ones that are CPO. Can probably knock like 15% off that purchase price (just guessing don't know M4 market).
Get an m240i.
Del
Your payment amount suggests you're going to pay for it over 60 months. I would challenge you with running the numbers again so you are out from under it in 12-24 months. Still finance it over 60+ months; but have the plan and intention of paying for it in 12-24. (Can include bonus in this repayment calculus). If the pain of paying for it that fast is outweighed by the nominal benefit you think you'd derive from owning and driving it; hell yeah. Let her rip. You certainly can afford it based on the numbers you gave. My only advice is to just get out from under that note ASAP unless you are able to get some super ludicrously low interest rate. Then just defease the debt and arbitrage money market rates or something.
My two cents: If you have to pay for it over 60 months... you can't afford it.
(I have always done this with cars in my life and it sucks but it keeps you disciplined. Just bought a new car earlier this year and repeated this exercise.)
Ran my math for 60 months - definitely can pay it off quicker but idea would be to keep the money invested in the markets instead of paying off a 5.4% loan quicker. Doing the same on my current car which is at 2.49%. Definitely can pay for it in 12-24 months - like I said I don't spend money on anything outside of rent/food (no fancy watches / clothes / vacations).
I think having the flexibility is important though and will definitely try to make sure the contract doesn't include any pre-payment penalty.
Yeah, my philosophy has always been that your materials should somewhat reflect your current income/status. Obviously don’t bend yourself over to buy something but if it’s within your means and you want it, do it. Hoarding money for the sake of it/no goal makes no sense to me.
I’m quite shocked how many people reccommend a finance professional clearing $100/$150k+ to drive a beater that’s for a high schooler, not a good look lol.
Bad advice IMO. In reality, $100/150k is frankly nothing in the context of this board / "high income" in general. Street/below street first year out of college income. Not a BSD financier who is slumming up to client meetings with crank windows.
I am a car guy but could never rationalize purchasing a depreciating "asset" with debt. If you cant purchase the car in cash without it affecting your life or financial goals then in my book you can't afford it. Not saying never lease, just the hypothetical. Same goes for watches and other luxuries. If you wouldn't really blink at buying a $15k Rolex, then you can afford it, if you need to save up for it / in the case of a car use leverage, then you automatically should be passing.
I don't deprive myself of any reasonable luxury I want and splurge on what I can afford, but also stay disciplined and know that despite earning several multiples of the median household income, I am by no means rich and in order to stay off the treadmill you have to live below your means.
You are going to be shocked at how quickly $150k goes my friend. Especially if you live in a HCOL area like most people who work in finance.
I used to think that if I made ~150k I’d be able to get a decent apartment and a nice car. My comp will be around there for my ft role and after running the numbers there is surprisingly little left over if you take full advantage of tax advantaged retirement accounts which a lot of us do.
Actually was planning on getting an M340i for a couple months after I got my full time offer until I sat down and realized that I legitimately could not afford it without sacrificing savings or entertainment. Still planning on getting a fun car that’s cheaper but I found it wild that I felt like there wasn’t much left over from my future income.
This is truly, and I do mean truly, some of the worst advice I have ever heard. The notion that as a general rule of thumb that your material purchases should reflect your "status" (what a joke of a word in this context, we are financial paper pushers not founders of FAANG, professional athletes, or movie stars) or income is absurd.
An adult response looks like @leveragedleverage98 below.
No matter your tax bracket, until you hit true f*ck you money, live below your means. Simple as. This doesnt mean you cant have nice things, or shouldnt go on trips, it just means spend with purchase and intent.
A finance professional clearing 500k a year living in a $4MM house (implied monthly payment of $32k) with two leased $200k vehicles is a joke, regardless of the fact that the bank and the credit card companies approved these purchases.
The older generation on this website remember that in 07/08 it was not just the lower class that defaulted and foreclosed on their homes, but plenty of one percenters as well. If you remember driving through the nicest neighborhoods in the US, there were plenty of $2-20MM houses selling at basement prices.
Op is making $365k a year and is obviously clearly driven and smart; enjoying an m4 in his 20s will be more memorable than being a little budget nerd obsessed with maximizing every penny towards retirement.
Also none of you are ever reaching “fuck you money” if you’re on this forum, live and loosen up a little boyo
IMO buying a new bmw in this market/economic environment is not the best decision, the depreciation is going to be violent and it will be very hard/expensive to get out of the car if you need to... You can find 2-3 year old models with decent warranty runway.
New cars are for ATH equities
I'd get a used AMG GT coupe instead if I were in your shoes...
lambo or nothing. bmw is lame
Car guy here. I doubt the M4 is your dream dream car. I bet once you get the M4 that you’ll start thinking about the real end goal (992 GT3, etc.). Slice your budget by 60% and get a nice, used M340i that you won’t worry about putting miles on, getting rock chips, etc… something you can really beat on. That $60k that you don’t spend today will be worth the $600k you can spend freely on your dream car later in life.
Get an M3 or preferably and M5 so you can attract a future wife and still keep the car after you knock her up a few times.
Id also recommend AWD and automatic so you dont end up losing the back end and ruining your cae. They really do have dangerously fun amounts of raw power right at the bottom of the band these days.
M4 looks cool but unless your tracking it or have another car the form doesnt beat the function of an M3 or M5.
If you must have a coupe... Id personally go for a mid engine Porsche 718 over an M4
Second all of this. If you’re getting a BMW, get a 4 door (M3 or M5). If you want a coupe, might as well splurge a bit more and go for Porsche 718 / 911, Benz AMG GT, of even the Corvette C8
It's not a question of whether you can afford it. "Can I afford it" isn't a great framework IMHO because it puts things on a pass/fail scale.
The right question is whether it's the best use of the money.
And I think a good way to answer that is, think about your most borderline non-purchases right now. What are the things you almost buy, or occasionally buy, but mostly don't buy because you'd rather save the money. This is a rough proxy for where your next dollar goes.
Me for example, I'd like to order more takeout but it always feels like a splurge when I do it. So if I was facing a purchase like yours (and I like cars too), I'd be asking myself: if I don't buy this car, how much more takeout could I buy with the same money and would that feel better?
That doesn't mean I'd necessarily get the car or order more takeout. I'd probably buy neither and put the money in savings. But the point of the exercise is, I know the car isn't a good purchase if I'd just as soon spend that money on something else that I don't currently spend on
Do not do this. Save your money for awhile and then get a nice car. This is too early for you. You should be maximizing padding the nest egg for it to compound over time. There’s not guarantee you’re going to keep earning this pay in high finance forever. You could want to switch jobs to a chiller job in 5-6 years and be really kicking yourself you did not save more when you were young earning big bucks
Think about it this way - you are spending~50% of your total NET WORTH on a depreciating asset. I get it you are a car guy, I am too, but it’s a just not the time for you. You will equally enjoy the car late 20’s or 30’s. You’re still young then.
First off, good taste in cars and congrats on making the transition to PE. As an avid car guy myself, I went through a similar situation during my associate years. Ultimately bought a used M3, that was damn near my dream spec and was at the time my dream car growing up. You've run the numbers and others have left thoughts, so won't make a financial decision for you. At the very least, I thought I'd write up a few thoughts on the intangibles once I had the car:
Not saying it's the smartest financial choice, but there were many other benefits to satisfying one of the vices I have. As a final thought, I didn't buy new or would have as much of a cash outlay as you're proposing in this scenario, so would think long and hard before making a final decision and/or consider alternatives that could get you the greater 80/20.
991.2 Carrera T, manual. Thank me later.
Bump, test drive a 911 and you'll be sold.
del
Do it before you’re old and sad and bald (for some). Yolo.
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