The idea of buying a gently used luxury car and proudly touting how you beat the system by letting some other “fool” take the depreciation hit is a mighty enticing proposition indeed. Just think about it for a second. You, yes you, can own a five-year-old Mercedes-Benz S-Class for right around $30,000. For roughly $25,000, that could be you sitting in the driver’s seat of a five-year-old example of Land Rover’s Range Rover. Heck, for just a hair over $20,000 you could be the proud owner of a five-year-old BMW 7-Series sedan or a BMW 3-Series convertible of the same vintage. A 10-year-old Mercedes AMG model can also be had in the neighborhood of $20,000, as can a BMW M3 of the same age.
Why would you want to drive a “bland-new” Toyota Camry or Honda Accord when for the same money you cruise the streets in a true luxury vehicle? You could own a meticulous piece of craftsmanship with finely tuned handling characteristics, supple leather, beautiful wood grain, and lots of status – you can’t forget about the way others will view you in your fancy new whip. The American dream of high-end status symbol ownership can be yours and make you look like a 30k millionaire.
It may seem like those luxury cars are making you an offer you can’t refuse but the proposition is hardly as enticing as the simple cost of entry implies. Here’s why:
High-end cars have high-end mechanical bits and their over-engineered nature tends to result in laborious and costly scheduled maintenance procedures. These high-dollar luxury cars were not designed with regard to affordable service schedules because, as they say, if you have to ask the price you probably can’t afford it. Are you a DIY’er? Shade-tree mechanics might be able to maintain a Chevy 350 engine or a beige Toyota Highlander, but the proprietary tools required for much of the routine maintenance on these status symbols will have you visiting the mother ship. That Range Rover or Mercedes S550 might be tempting for $25,000, but you are still maintaining a $100,000 car, and taking over maintenance right when the big stuff starts coming up.
When something breaks on a high-end luxury car, the repair bill can be astronomical. Mainstream cars are usually designed with concern for repair costs and the accessibility to wear items. Luxury cars are designed to offer the most refined ride and handling with varying degrees of emphasis on performance. You will often find that a simple repair such as replacing broken suspension bits on a Ford Taurus is a much more financially tolerable fix than the massive billable hours and expensive replacement parts you will experience when addressing a blown out air suspension on a Range Rover.
All too often, the 30k millionaire neglects to consider another key cost of ownership when they purchase that gently used status symbol of a car, fuel economy. While the price of gas has little effect on those able to purchase a brand new $100,000 car, it has a significant impact on the budget of a person shopping for a vehicle in the $20,000 to $30,000 price point. These luxury cars are large, heavy, and powered by powerful engines, meaning that they are not for those wishing to be miserly at the fuel pump.
All of those high-tech features and creature comforts that were the exclusive domain of luxury cars just a few years ago have trickled down to the masses. The rapid pace of technological advancement means that mainstream cars like Fords, Chevys, Toyotas, and Hondas now have electronic gizmos that were only found in those cutting-edge foreign luxury cars just a few years ago. Even budget brands like Hyundai and Kia are offering gadgetry that would have been a selling-point on a premium vehicle just five years ago. The notion that you are getting fancy creature comforts in a five-year old luxury car grossly underestimates the trickle-down effect of technology in the modern era.
You are free to do what you want with your own money but remember that it’s hard to keep up with the Joneses if your car is stuck in permanent limp mode because you could only afford the cost of entry, but failed to take into account the cost of ownership.
As they say, if you have to ask about the cost of ownership…
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