October 29, 2012 - Here are some things that people don’t always think about when they go to purchase a high end car:
Gas is more expensive – Most people don’t even consider prices as one of the consequences of buying an expensive car. Nicer cars have more expensive engines that have been specially tuned. A nice engine needs high octane fuel. If you try putting regular leaded in a Mercedes, it’s going to run but not for long. A little bit extra for gas may seem trivial, but imagine having to pay an extra 20 – 30 cents per gallon every time you fill up your car.
Insurance – It is more expensive and more difficult to insure a luxury car. Some cars are so expensive that certain insurance companies won’t insure them at all. Who can blame them? The risk for accident is equal for everyone, higher even for some sports cars, so why take a chance of having to pay out $100,000 when someone wrecks their Ferrari? If you can find insurance for your luxury car, you can expect to pay as much as $400 to $500 a month to get protection.
Maintenance Costs – I promise that maintaining your luxury car will not be cheap. A common misconception is that nicer cars break down less because they are more expensive. It is not true. Luxury cars are more expensive because they perform better, or offer comforts that regular vehicles don’t. Luxury cars need to be serviced just as often as any car. Often times if you try to take a luxury car to a regular mechanic they will not have the parts or the knowledge to work on your car. You may find yourself at the dealership every time you need an oil change—a cost that will add up quickly!
Repair costs – This may sound like the same thing as maintenance costs but it’s a little different. If you get into an accident in your Toyota sedan and you have to get a new bumper—you can go just about anywhere to get one and it will be relatively inexpensive, as far as bumpers go. If you get into an accident in a Ferrari, you are going to be very limited in the places you can go to get it fixed. Not only that, the cost of that Ferrari bumper is going to be outrageous because how many replacement Ferrari bumpers do you think they make every year? Not as many as they do Toyota bumpers, I will tell you that.
Resale is tough – Expensive cars depreciate in value quicker than regular cars. This used market for luxury cars is different from the used market for regular vehicles. Most people, who can afford to buy a really nice car, will want to buy it brand new rather than used. Depreciation is a simple game of percentages. If I buy a new car for $20,000 and it depreciates by about half in the first 3 years, then I’m out about $10,000. If I buy a new car for $100,000, I’m out roughly $50,000 in the same amount of time—big difference.
