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.