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5 Reasons Why Expensive Cars Cost More Than You Think

March 2, 2016 by Christina Garofalo 1 Comment

When most people commit to buying a luxury car, they know they’ll spend more money at the dealership. But unfortunately the expenses don’t stop at the sticker price.

This was the case when a friend recently told me that driving a fancy car didn’t cost that much more than a normal car.

Here’s how I explained to him why he’s wrong.

You spend more money on gas.

Luxury cars will drive up your spending on gas two ways.

Check your owner’s manual. Manufacturers of many luxury cars require or recommend that you use only premium gas because they tune their engines with a higher compression ratio than other cars and a lower octane fuel could lead to pre-ignition, causing engine knock. Premium fuel generally costs 20 to 30 cents more per gallon.

Additionally, many luxury cars have larger, more powerful engines that prioritize performance and are weighted down with heavy leather seats and other luxury touches, which combine for less fuel-efficiency. So not only will you spend more on expensive, premium gas, you’ll also burn through that gas more quickly.

If you want to put into numbers, consider this: If you drive 1,000 miles a month, choose a luxury car that gets 20 miles per gallon over a normal car that gets 30, and pay $2.50 for premium fuel rather than $2.25 for regular, you’ll spend $50 extra on fuel per month — $600 per year.

Luxury cars cost more to maintain and repair.

Manufacturers of high-end cars often require that scheduled service of the complicated engines and electronics be done at the dealership’s service center or at approved, high-priced specialists meaning that every checkup costs a little bit more. Add in the higher price of specialty fluids and filters, performance brake pads, and sport-rated tires, and you’ll find that keeping up with routine maintenance rapidly outpaces what you’d spend on a normal car.

And when parts need to be repaired or replaced, get ready to spend more as well. A more expensive car means you’ll also pay more for everything from replacement windshields to body parts, and then having to pay more for expensive paint-matching and pearl coating for each of those body parts.

You’ll spend more on parking.

When you own a luxury car, it’s very easy to convince yourself to avoid street parking to not have to deal with fears of burglary, vandalism, or damage. And if you find yourself in a big city for work or a fun night out, sticking to parking garages can cost anywhere from $20 to $70 per day.

You’ll spend more on insurance.

Even if you are able to forever avoid the misfortune of burglary or an accident, your insurer will still make you pay for the risk of it.

Insurance premiums are largely driven by vehicle cost, because an insurer has to replace your vehicle if it’s totaled in an accident. An expensive luxury car would thus fetch higher insurance premiums.

The vehicle’s safety record is also an important factor in determining insurance cost, as is how the cars are often driven. Insurers known that expensive, sportier cars are more frequently driven in risky ways compared to, for example, a family-friendly minivan in which owners frequently carry their kids.

You might be more likely to buy other expensive things, like clothes.

But for many people, the aspect of luxury car ownership that has the highest potential for spending loads of money is the lifestyle change that could come with a luxury car purchase.

Studies on conspicuous consumption suggest that signaling — purchasing items that reveal our wealth to others — might even part of a deeper human impulse to seek status in our communities. In other words, once you enter into a lifestyle that values expensive luxury cars, you may find yourself spending more on everything from clothes to watches to vacations in the hopes of keeping up with your neighbors.

Filed Under: Spending Tagged With: buying a car

Buying a car? 10 Ways to Get the Best Deal

May 14, 2019 by Lazy Man 8 Comments

This is a guest post from Master Your Card. If you’ve never been there, it’s worth a visit. Not only is the content top notch, but the design is one of the best I’ve seen. I can’t help myself from clicking through to the articles. If you aren’t too impressed by a snazzy layout, I suggest you sign up for his RSS Feed.

Whether you’re buying a car from a dealership or an individual buyer there are things you can do in order to make sure you get the best deal possible. After all, if you’re making a major purchase you should try to save money where you can, right?

Buying a car from a Dealership

Don’t ever accept the sticker price for a vehicle, and don’t ever, ever feel like the dealership isn’t trying to get as much money from you as possible. Car salespeople are taught to get money from you in many different ways, so be on the defensive.

  1. Walk into the dealership with financing in place. You should always go into the dealership with a check from your bank or credit union already in your hand. It’s a great bargaining tool to get your Toyota Prius on the best finance plan possible. If the dealership can indeed offer you lower interest on financing with better terms then take it, but it’s a good idea to have financing in place in case the dealership can’t beat it.
  2. Have a plan and stick to it. Tell your salesperson, “I’m going to give you this amount of money for this car, and I will absolutely not spend any more than that.” Don’t pay docking fees or other stuff they add on to make more money. The amount you say you’re going to spend is the amount you’ll spend, period.
  3. Know the real value of the car. If you’re buying a used car you should find out the real value of the car before you agree to buy it. Bring along a Kelley Blue Book or have access to the Internet to search for the value. Don’t spend more on a car than it’s worth.
  4. Know the real value of your trade-in. If you are trading in a car you should research its value beforehand. You’ll probably get a better deal if you take the time to sell the car yourself, but trading in can be quite convenient as long as you get a fair price.
  5. Don’t accept add-ons. Even if you don’t get financing through the dealership they’ll try to talk you into buying credit protection, GAP protection, extended warranties, and all the other add-ons that make them money. Don’t buy these things through the dealership. If you really want them you can usually get them through your lender or another source for a lot less money.
  6. Go on a day when nobody else does. Is it a torrential rain storm outside? It’s a perfect day to go shop for a car! If you go on a day when nobody else would ever think of browsing at cars you may be able to get a better deal because you might be the only person your salesperson talks to all day. They have quotas to meet, after all.
  7. Walk away. If you aren’t getting the deal you want then walk out of the dealership. Nine times out of ten you’ll get to the door when
    suddenly the salesperson will stop you and accept your terms.
  8. Buying a Car from an individual

    It’s not all that different, but there are a couple of other things to keep in mind:

  9. Have the money in your hand. If the car you’re buying is advertised as $5000, approach the seller with $4000 in cash. The sight of actual cash
    is powerful, and may get you the car for much less.
  10. Haggle. It may feel weird to haggle with someone who isn’t a salesperson by trade, and it may even feel a little impolite. Don’t let
    this stop you from negotiating a good deal.
  11. Show up informed. Have a print out of the car’s value in your hand to show that you know exactly how much the car is worth. Some sellers may
    not even be sure what their cars are worth! Don’t pay any more than the smallest value listed.

Negotiating the selling price on a car is a lot like a game. There is a lot of psychology involved and as long as you don’t get intimidated easily you can save quite a bit of money on your car purchase.

Let the games begin.

Filed Under: Frugal Tagged With: buying a car, buying a used car, car salespeople, kelley blue book, sticker price

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