My '99 XK8 convertible is my dream car, after 40 years of Jags, BMWs, Mercedes, etc. The key to happy motoring with these cars is 1) inform yourself about the issues, mainly the 4.0 liter's needs re upgraded timing chains, tensioners & water pump, and 2) have a local Jaguar specialist (not dealer) who can bring them up to standard & maintain them there. My XK8 cost me $5800 in 2015 with perfect body & interior, no accidents and with the engine upgrades already done & convertible top hydraulic lines replaced. After new tires, shocks, motor mounts, front brakes, mass airflow meter, valve cover gaskets, plugs & filters, she now runs & drives like new for a total all-in price of around $11k. I couldn't be happier.
UPDATE: 15 months into ownership of my '99, I've spent very little on the car except for oil & gas. Classic/specialty auto insurance (Hagerty) has reduced the cost of comprehensive insurance to less than $400 annually on an agreed value of $15k. Costs since the initial review have been limited to a new Jaguar ignition coil ($128) & professionally repainting the front & rear bumpers (approx. $600), a project I intended since purchase. There have been no other costs; everything works great on the car & it runs & drives beautifully.
I still marvel at how much car you get with the XK8, compared with much more expensive GTs like an Aston Martin DB7 or (especially now) Porsche 911. It took nearly 20 years for the XK8's predecessor, the XJS, to begin to appreciate in value, so it will be awhile before XK8 values start climbing. In the meantime, buy the best accident-free XK8 you can afford, have a local Jaguar specialist maintain/service it, and take care of it like it deserves. Great value, great motoring, great experience.
UPDATE (5/16/17): 30 months in & still loving my XK8 - she's a keeper. A few months ago, I decided to fix some miscellaneous leaks (oil, coolant), a part of owning any British car. My local Jag specialist replaced the coolant bypass hose, water distribution pipe & thermostat housing, plus some o-rings & the coolant cap. The shop also replaced the oil pan gasket & drain plug. The fixes weren't cheap but they worked. Costs: parts ($321.32) & labor ($284.20) totaled $624.80 w. tax.
The car is now approaching 130k mi. & drives as sweet as ever. I'm planning some road trips for the summer, including a couple of British car shows. The body & paint is excellent, the black leather interior has that aromatic richness of Connolly leather that I love, and the power top, AC & electricals all work perfectly. It's still a few more years before XK8s start their upswing in value as a modern classic, so find a good 'un now while they're cheap & enjoy!
After 80,000 miles, the timing chains came off. The engine was destroyed. And the warranty had expired. Jaguar must have known about this issue -- the issue has been widely written about by other owners on the internet and my dealership stated that chains typically come loose between 80,000 and 100,000 (but a small oil leak usually leads to a repair before all timing chains come off). But no one warned me. Not Jaguar, and not my dealership. Don't be a fool. Don't buy junk.