I have a '90 300SE and had an 84 300SD. Both are good choices and I like the smooth running, quieter and quicker gas car better.

However, that being said, I think if I were in your position, I think I'd opt for the diesel. Here's why:

1. It is a 300SDL, 5" more leg room in the back.
2. You will get 26-28 mpg with the diesel, vs 21-23 with the gas engine.
3. Right now, diesel is 10-20 cents less than gas.
4. The '86-87 diesels had refinements like airbags, 15" wheels, ABS and cosmetic upgrades from 81-85 diesel models.
5. With all the above considered, the '86-87 300SDLs are hard to find and therefore command a premium.
6. Last but not least, the $5000 lower price tag would be the decision maker for me. You are going to spend $1-$2K per year on maintainance on either one. So, having $5K in your pocket will put you ahead of the game.

There is one important qualifier, make sure you have a compression test run as well a good pre-purchase check.

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Mr. BILL

91 300E 120K
90 300SE 275K (sold)
92 BMW 525iM 120K
90 BMW 525iA 175K
85 300D 175K (sold)
84 300SD 245K (sold)