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I generally find 3 types of people who buy used cars:
10% are truly wealthy, have the disposable income to not worry about what a vehicle costs.
30% are leasing them and can afford the payments but CAN'T afford the actual car (BMW has very attractive leases) 60% simply wait 1-3 years and buy them pre-owned for half the price of new
Most of the truly wealthy folks I know are older and their taste in cars reflect that. You'd be surprised at how many multi-millionaires are driving around in Caddy DTS's instead of German luxury cars.
Most folks who lease a vehicle go for the most entry-level luxury car they can afford, BMW 3 Series are EXTREMELY popular here. BMW makes a ton on 3 year leases.
The majority of luxury car buyers I find just simply wait a couple years until the used market has quite a few of the luxury vehicle they're looking for and snatch it up for significantly less than new.
This is how I have always bought my luxury cars (1-3 years old). I find it makes the most financial sense for me.
Smart money buys them for pennies on the dollar when the dumb money goes bust.
Oh, I dunno.
I lease my daily driver.
Because psychologically, I don't want to care about the car.
And I want a brand new one every few years...I need the reliability of brand new because of my long commute to BFE at all hours AND because I enjoy it. Since I was a child, my two greatest loves were (and continue to be) CARS and dogs. Cars are more than transportation to me.
On my last lease, it helped me avoid losing money (car was worth a lot less than the residual they predicted - got the car right before the market crash).
On both my leases, I could have paid cash outright. But like I said, I don't want the hassle of getting rid of it or the attachment I know I get when I buy a car. Also, something bothers me about purchasing a depreciating asset.
My lease payment is about 1/10th of what I put into savings every month.
You can to try to generalize, but there are reasons leasing makes sense for various people.
It might be undeserved, but, honestly, my first thought at seeing an expensive BMW is that the driver is more interested in looking rich than being rich.
But sometimes the car is just so FUN to drive. I just test drove a BMW convertible (as well as the Audi convertible) and it didn't occur to me that it looks "rich." I drove it on a beautiful sunny day along the lake shore and had a blast while driving it.
I've decided that, with 3 kids and all the kid sports gear, it is a bit "impractical" at this point (no trunk space). But someday, I'll probably buy a fast, luxury convertible that is FUN TO DRIVE without caring at all about "looking rich."
It always amazes me how much people judge other's motivations by the type of car they drive. I have known guys living in cheap apts. who drive $50K+ cars as well as very wealthy business owners driving "practical" cheaper hybrids. Of course, some people are trying to make a statement with their car, whereas others could care less.
And I, for one, think that's cool. I drive a twelve-year-old car and refuse to air condition my home, but I spend a truly ridiculous amount of money on gourmet groceries, fine dining, and expensive wine. We all have our indulgences.
But sometimes the car is just so FUN to drive. I just test drove a BMW convertible (as well as the Audi convertible) and it didn't occur to me that it looks "rich." I drove it on a beautiful sunny day along the lake shore and had a blast while driving it.
I've decided that, with 3 kids and all the kid sports gear, it is a bit "impractical" at this point (no trunk space). But someday, I'll probably buy a fast, luxury convertible that is FUN TO DRIVE without caring at all about "looking rich."
It always amazes me how much people judge other's motivations by the type of car they drive. I have known guys living in cheap apts. who drive $50K+ cars as well as very wealthy business owners driving "practical" cheaper hybrids. Of course, some people are trying to make a statement with their car, whereas others could care less.
true. My husband has dreamt about having a porsche 911 for years.
The sound of the engine, the acceleration...... he carefully watched for the exact one he wanted with all the extras he wanted, one came available, just under 2 years old with very low milage and he went and grabbed it.
It will prob sit in the garage half of the year but the pleasure he will get driving it with the top off will be worth every penny spent. He worked hard for his salary and bonuses and is treating himself. Even better that is worth over double in Switzerland where we will be exporting our cars to when we move
If he gets tired of it we will actually make a profit !!
And I, for one, think that's cool. I drive a twelve-year-old car and refuse to air condition my home, but I spend a truly ridiculous amount of money on gourmet groceries, fine dining, and expensive wine. We all have our indulgences.
That's just it, isn't it? We all have our vices and we all have our little things we like to indulge in.
New clothes? I haven't bought new clothes (that aren't work clothes) for years (excluding the two pairs of jeans I have bought in the last year). I don't do jewelry...nowhere to wear it or the fancy new clothes. I don't have a smart phone (or the accompanying ridiculously expensive plan that comes with it). Some days I buy a 30 dollar piece of filet and some days I eat the same batch of lentils ($1 a pound) I made for three days in a row. No ipod or ipad or home theater.
Those things just aren't interesting to me. So I get it that someone would not understand why I want a car that is $$$$$$$. It's not about impressing anyone (or I'd walk around in something besides jeans a t shirt). It's about how cars are awesome.
That being said, any luxury item you purchase should be one you can pay for in cash. It's a LUXURY item. Not a necessity.
I agree with most comments that folks are probably spending more on their car than they can afford.
Our local public school as 2/3 the kids qualifying for free-lunch because they are low-income. The other 1/3 aren't much better off, yet you'll see a bevy of Escalades and Lexus's at drop off time.
I used to worry about such things. My first car out of college was a BMW 325 convertible. I was young, single, renting... and spent most my income on the car.
Now, I'm married with a dual income around $400k/ yr and drive a 13 year old truck.
That being said, any luxury item you purchase should be one you can pay for in cash. It's a LUXURY item. Not a necessity.
What about a "luxury" $50K car that can be partially financed at .99%-1.99% (common now)? Maybe someone could pay cash, but it is not to their financial advantage to do so. Maybe low financing can be used to free up cash so it may be invested in other areas for a higher return?
p.s. Also want to add that most luxury cars keep their resale value better than other types of cars, which should also factor into the financial equation.
That's just it, isn't it? We all have our vices and we all have our little things we like to indulge in.
New clothes? I haven't bought new clothes (that aren't work clothes) for years (excluding the two pairs of jeans I have bought in the last year). I don't do jewelry...nowhere to wear it or the fancy new clothes. I don't have a smart phone (or the accompanying ridiculously expensive plan that comes with it). Some days I buy a 30 dollar piece of filet and some days I eat the same batch of lentils ($1 a pound) I made for three days in a row. No ipod or ipad or home theater.
Those things just aren't interesting to me. So I get it that someone would not understand why I want a car that is $$$$$$$. It's not about impressing anyone (or I'd walk around in something besides jeans a t shirt). It's about how cars are awesome.
That being said, any luxury item you purchase should be one you can pay for in cash. It's a LUXURY item. Not a necessity.
Exactly! I live in a junky double wide (woohoo!) so I can save money on rent to fly more. I have a few friends who think I'm crazy to spend a bunch of money on the planes when I make plenty to live in a nice place downtown. Of course, all my aviation buddies are jealous that I found a cheap place close to the airport so I could devote more time to it .
Everyone has their luxuries... My downfall is flying and I'll drive a junky old car and live in a junky old trailer to keep that going. Keeping up with the joneses be damned!
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