Another AskMetafilter user wonders whether she should buy a new luxury car:
Should I buy a luxury car or a practical car? I’m a 27 year old female. I’m single and have no kids. I want to get a luxury car (nothing ridiculous, probably a BMW 325 or IS 250) but I’m wondering if I will regret buying it, as I don’t really NEED it… but I just want it. I don’t have any obligations today, and I can afford it — why not treat myself? However, the practical side of me says I don’t really need it and I would be fine driving a practical car (i.e. a Camry) as long as it gets me from point A to point B. I don’t want to lease or buy used as I plan to keep this car until it breaks down!
The first comment is excellent:
If you can really afford it — you’re paying cash, you’re already putting enough money into your 401-k to get the full employer match, you’re putting extra money into an IRA, you’ve got three (or six) months extra cash saved up, you don’t have any looming debt — then I think you should go for it. That’s what money’s for: buying things.
The entire discussion is good, revealing how much we invest in our vehicles as representations of our selves.
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[...] Get Rich Slowly (a lovely blog) has written about a woman who’s deciding between buying a luxury German car and a reliable Japanese standby. I was in this situation not too long ago, and I agree with the response that Get Rich Slowly has quoted as the best answer: If you can really afford it — you’re paying cash, you’re already putting enough money into your 401-k to get the full employer match, you’re putting extra money into an IRA, you’ve got three (or six) months extra cash saved up, you don’t have any looming debt — then I think you should go for it. That’s what money’s for: buying things. [...]
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One of the criteria for making a decision is Total Cost of Ownership. It feels pretty good to be driving in a Bimmer until you get the bill for your first oil change and find out it costs $80-130, depending on where you live.
It’s fine to buy any luxury item you can afford, but make sure that you understand what you’re actually getting into before making the leap.
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In response to VinTek’s comment, any new BMW is covered by a four year maintenance warranty. You don’t pay anything for oil changes, repairs or factory recommended maintenance. Also, depending on how you drive your BMW, it can take over a year before you even need another oil change since they use synthetic oil. (You can tell I am a loyal BMW driver.) I have had my 3 series for over 6 years (bought new) and I have never needed to take it in for anything but routine annual visits. My advice is if you can afford it, they are extremely trustworthy cars that not only look great but perform great!!
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PLEASE review the research posted on the web pertaining to “hedonic adaptation” and “happiness research”. Luxury car purchases make you feel excited and happy for awhile. In the long run, however, you may feel less happy as you find yourself stuck on the “hedonic treadmill”. Trust me (from personal experience). Do not “treat yourself” to a new luxury car. It will undermine your ability to maximize your personal finances. And, it will NOT make you happier.
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I read the responses. Great but are you saying pay cash for a car? Should she finance? The interest rates are low and you can negotiate with dealers. Tell them your bank is going to offer a low rate and negotiate that along with the price of the car.
Cash for a car…are you sure that’s a good idea? I know they depreciate but why give up liquidity.
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You might look at alternatives to the expense of a BMW and go with a loaded Camry or Accord. There are lots of dependable vehicles out there that drive as well as a luxury car (Camry vs Lexus)and are often on the same platform.
I would say if you can afford the purchase without getting “upside down” with 5 or 6 years of payments, then go for it. Sometimes you just have to satisfy that dissonance you feel about something. If you don’t do it, you may always wonder what it would have been like to own one. I owned a few Vettes, z-cars, and one Alfa in my earlier years. They were great but I found that Volvo and Subaru met my needs. I got the luxury/fancy cars out of my system.
My father in law, bought new cars every three years. I used to criticize him every time he brought home a Lincoln or a Grand Marquis, with the admonishment of the money he was wasting. “Can’t take it with ya’” he would say back. He died at age 68, one year after his wife. He was right after all.
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The first bill for your BMW oil change is $0. And the second. And the third. etc.
Maintenance is included for 3 years with BMW cars.
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“There is no free lunch”
JD – You could do a whole post on this mentality.
…sure you might think that oil change is “free”, but the “cost” has already been paid, that oil change you pay is included in the bloated price of the car.
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As someone once said, a car is the one place where you can put your money and enjoy it almost every day. I agree with most of what has been said, except for criticism about paying cash for a car. Cars don’t appreciate. They depreciate immediately. Paying interest on a depreciating asset only increases the cost. I’d probably get a lower end BMW or Lexus or I’d load up a Honda or Toyota. “Cheap” cars drive so well now that I’d probably load up the Honda.
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Whenever I’m faced with a decision like this, I think about what I could do with all the money I’d save by going with the cheaper option. I spent $20,000 on my current car. I could have bought a $40,000 car. So for me, the question was, “what other things could I do with $20,000?” That money would buy me five or six nice vacations to Europe, for example. For me it’s a no-brainer.
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I personally think you need to look at your needs.
I have to make at least two round trips per year from east TX to San Francisco Bay area. I used to do it in a “cheap” beater. However, the comfort left something to be desired.
I now make these trips in a Lincoln. I can do it in two days, as opposed to three days. Fuel economy is about 25 MPG, at 80MPH, with a loaded car top carrier on the car.
For me, luxury is hands down.
If I lived in town, worked in town, and only had to drive a few miles to work, I would consider a smaller traffic friendly car. It would still be fully loaded.
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I would say look at the best car for the money in my opinion, the mercury milar or ford fusion, both are half ways between luxary and pracical, plus its a great car for fuel mileage.
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If I were to buy a car, I would buy a more practical alternative to a BMW. I’d buy a loaded Camry or Accord as well, but I want either a Pontiac Vibe or a Toyota Matrix. they’re both practical. My mom’s friend told me that Vibes are junk and Porsches and BMWs are better. I was kind of hurt.
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Let me share my take on this…
1) Saving is a part of life but not life itself. Set saving goals and when you hit them allow yourself some things you desire in life that you have denied yourself. So in your case, I’d say if you had 5 times the total amount of the car saved/invested then treat yourself if you “really” want the BMW.
2) If you can get a 6% or less car loan then pay for the car using a car loan. The reason for this is that you should be able to make 10% avg. return on your money in the long-term. So why not have your money working for you and be available to you if you need it.
3) Don’t ever buy car’s new, unless they are low priced cars (sub $15K). The reason for this is two fold. Cheaper cars usually don’t last as long, so you won’t save as much by buying used – in the long run. For higher priced cars (above $15K) buy used (3 to 4yrs old). The reason for this is simple, you’ll be able to save 1/3 to 1/5 of the total price of the car. At the same time, you should be able to find a car that only has around 30K miles on it, which is low mileage. Ex: A $50K car new (2004) would be worth around $28-30K in (2007) with around 30-40K miles on it. Also, high priced cars are usually very well taken care of so they are in excellent condition, another plus for buying used.
4) Never go into buying a house or car thinking you’ll own it until it dies (or you die). Owning a car for 10+ years requires almost the same discipline as not buying a luxury car (new or used). Typically, once you get a taste of the better life – you want to upgrade since you’ve already justified/allowed yourself the luxury to purchase such an item. I’d say plan on owning a car from 4 to 7 years tops. But if you buy a cheaper car then you can drive it until it dies since a new cheaper one will probably not be that much different with regards to features/performance.
5) If you want to retire early, then don’t buy anything luxury. Retiring early is an aggressive goal even if you make good money.
Well, these are my guide lines. I have over $540K saved for early retirement (1/3 of my goal). As for what I drive, it’s a 2003 Protege 5 sport wagon that I got for $14,500 new. I financed 100% of it (tags, tax, etc.) with 0% for 36 months (had great credit so it wasn’t a problem). The car is paid for and I really want a luxury car – 2004 Infiniti FX45. But it’s hard to bite the bullet since I want to retire early (I’m 38yo now and want to retire at 45yo). Finding that balance would be easier if I want to retire later but I’d rather have a happier second half of life vs living large now. And as another person said, just imagine what you could do with $20-40K over a 4-7 year period. Save it and that money would double in 7.2 years if you got 10% avg. rate of return. That’s one way to have your money pay for the car itself. Let it grow for the next 7.2 years until it doubles. Whatever you decide – good luck. You only go around once and you never know when your time is up. Live for today but plan for tomorrow. But money will never make you happy, it’s just a tool that allows you to create an environment that you enjoy – but not the joy itself. :O)
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I agree that total cost of ownership is an important consideration. It is surprisingly different from vehicle to vehicle. The BMW costs $80 for an oil change but you don’t pay for the o/c for four years. A Porsche oil change is $200 but only happens every 20,000 miles. My VW Passat costs $80 for an o/c and it’s supposed to happen every 5,000 miles.
Tough to believe that a VW is more expensive to maintain than a Porsche but there you are.
BTW, Audi wiper blades can set you back $60 a pair. VW Passat wiper blades are a dealer only item and cost about $50 a pair. You really have to research the hidden costs.
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If you fix it yourself or do the oil changes yourself you will not only laugh at the costs of a garage or dealer who will charge 5 to 10 times the cost for the labor. You will also learn something about the car which is a good thing and you will be a more conscientious consumer. Once a guy saw my bimmer and said oh I couldn’t afford a bmw. I looked at his suv and said that’s ok I couldn’t afford the gas for that beast!
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In this economy (I’m from the future 2010 AD) buy a Hyundai.
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In today’s tough economy, buying used may be the best option.
Consider a used Infiniti G35
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Hi, I was hoping to get some advice on what kind of car I should buy. I’m 19 and in college, I have no major bills (just cell phone, and car insurance) and I have a great job lined up. I won’t even think of purchasing a car until I actually get the job. Right now I drive a 2000 Chevy Malibu. It’s fine for right now, but I would really like a better one, and preferably not another Chevy. I have my eye on a used Mustang, but I also want a practical car. Any advice?
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“My father in law, bought new cars every three years. I used to criticize him every time he brought home a Lincoln or a Grand Marquis, with the admonishment of the money he was wasting.”
I like people like your father-in-law. A gently used, three year old Grand Marquis or Town Car is one of the best used car deals out there.
They are both based on the Ford Crown Victoria, which is sold primarily for taxicabs and law enforcement. All three models are big, comfortable, reasonably reliable, and cheap to maintain. Ford hasn’t changed the design of any of these in years, so they depreciate quickly.
I got a very nice used Grand Marquis for about the same price as a comparable used Toyota Corolla. I’ll take the full size, the smooth ride, the massive trunk, and the heated leather seats, thank you very much.
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It all depends on if you can REALLY afford it and what the car will be used for.
I had both luxury and non luxury vehicles in the past and was satisfied with almost all. Right now I have one standard (Honda Civic) and one luxury car, I use the little Civic way more often and I’m perfectly happy with it. It takes me to and from my job, supermarket and other places. We use the ‘luxury one’ for longer trips (100 miles or more). Both cars are great and I love them both but the luxury car, I can say, was not my smartest decision. 17K Civic vs 45K luxury car, I can definitely say Civic was a much better investment (although car is almost never a good investment).
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I bought an Acura TSX 2004 used with 122,000 miles for 10,000$ CDN in 2010. It’s a 4 cylinder and has 200 horsepower. I’ve had it for 1 year and it runs really well. It’s not too expensive to maintain and will get about 30MPG Highway. I can drive about 450 miles on 1 tank of gas. My car is Milano red with beige leather seats. In fact, I never cease to get compliments about how classy and elegant the car looks.
I’ve had Hondas (Acura is made by Honda) all my life and have bought them new and used. I’ve had no major issues despite driving them very hard and up to 150,000miles. My old Civic Hatchback 1995 was able to keep up with 90-mile an hour traffic! In fact, it’s not unusual to see some Hondas/Acuras with over 200,000 miles still driving around.
There are many Acura TSX’s on the market, new and used. If you buy new you might pay up to 35,000$ but may perhaps have peace of mind. I, myself, prefer to buy used as you can save many thousands of dollars. But you must take necessary precautions. Get the vehicle identification number and order a CARFAX report. It’s going to cost you, but it’s well worth it. Second, get a thorough mechanical inspection, including a compression test. You can get a good used Acura TSX 2004-2010 with anywhere between 20,000-80,000 miles for anywhere between 10,000-25,000$. Once you’ve bought it, tune it up and change your oil every 5000 miles and it will last you for a very long time. Happy motoring!
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