What’s the point of making money if you can’t enjoy it?
I don’t know about you but one of the reasons why I work as hard as I do is so that I can enjoy the things I like. And one of the things I like are cars.
If you’re a car enthusiast a regular car won’t do. And you shouldn’t settle for just any car either.
When you love cars, it’s as much about your experience behind the wheel as it is about getting from point A to point B.
Growing up I had posters of all sorts of vehicles in my room. Standing in front of all those cars I would tell myself that one day I would get to experience them.
Some of them haven’t been that expensive. Some have.
The ability to enjoy your passions is what makes life worth living. But that’s only after you take care of the essentials.
Make sure you have:
- No lingering consumer debt, like credit cards.
- At least a six-month emergency fund.
- And at least 10% of your gross income in retirement funds.
As much as we love cars, the single best advice we can give anyone that wants to buy an expensive car is to never rob yourself of financial freedom to fulfill your dreams.
But if you can afford it, do it. You won’t regret it.
Cars are expensive, period. Besides the initial purchase cost. You also have to consider taxes, registration, fuel, insurance and maintenance.
But don’t let the price tag scare you away from getting behind the wheel of your favorite car. Here are a few ways people afford expensive cars.
1. Spend Cautiously
Make buying your expensive car a priority. Be scrupulous with how and when you spend your money.
Ideally, you should be aware of every dollar that comes into your possession and every cent that goes out.
Unless you have buckets of money coming in all the time (in which case why are you wasting your time reading this).
Don’t spend money on items that aren’t really necessary.
For instance, this is what I do when I’m saving up for a big-ticket item: When for instance I have an urge for some take out or a brisket burger.
I think of how spending that cash is delaying me from getting what I really want.
While you may not have to be that miserly about your spending habits depending on your situation.
You’ll be surprised to find just how quickly those expenses you think are incidental actually add up toward your dream ride.
2. Pay Cash
Save and spend cash.
Don’t let anyone fool you with a bunch of fancy talk. The best way to afford anything is by paying cash.
The average interest rate in the United States for a car loan is 4%. You always pay more for a car when you finance no matter what the interest rate is.
If you can swing it, cash is the way to go.
Paying cash leaves you free and clear of interest and annoying monthly loan payments.
But if you can get 0% financing. By all means, get a loan.
And use the money you would have used to buy the car to invest in something else that can make you even more money, like a high yield savings account.
3. Buy Used
Luxury cars cost considerably less used. Cars depreciate fast, especially within the first year.
And with expensive cars, it seems like the value plumets more rapidly.
Depreciation is the degree to which a given vehicle loses value over time. It happens because that once shiny thing today in a year gets replaced with a new shiny thing.
Different cars have a different rate of depreciation. According to Kelly Blue Book, the average vehicle drops in value 49.6% after five years.
A 2023 Mercedes S Class goes for $114,000. If you were to take out a seven-year loan to pay for the car, in five years you’d still be in the middle of paying for a car that’s only worth $57,456.
Keep reading for more ways to buy an expensive car used.
4. Private Seller
I’ve done this.
The great thing about buying any car from a private seller is you’re usually speaking with someone that’s like minded about the car in question.
And has intimate knowledge about it.
Once, I was hunting around for a certain Camaro and I found one being sold by a husband and wife whose son went to college and no longer needed the car.
They were able to tell me things about the car that you’re likely not going to get from a salesperson who’s more interested in just selling a car than helping you get the car you want.
Not only were we able to negotiate a fair deal. But about two weeks later the seller called to see how the car was treating me.
I explained to him about an issue I was having with the carburetor. The man not only made suggestion to me about maintaining the car.
But he even took time out of his schedule to help me install a new carburetor.
This is a great way to experience cars without a ton of commitment from you.
You can drive the car and all major repairs are handled by someone else. Then once the lease term is up simply drop the car off and grab the keys to a new car.
The only problem is as hundreds of dollars leaves your bank account, you never own anything. But it can be a good option under the right circumstances.
For instance, if you can think of it less like money you’ll never see again.
And more like an investment into an unforgettable experience (which is the way I choose to think of cars).
Then I say go for it, especially if you have investments elsewhere making you a lot more money than what you’re spending on a lease.
6. Buy During Hard Times
You’ve heard the saying, buy low, sell high.
Desperate times is a great time to buy. It’s when a lot of money is made by investors because people sell at deep discounts because they need money fast.
During times of financial constraint, it doesn’t make sense for them to keep a car that’s not economical or practical.
Sellers are willing to drop the price to below market value to get the cash for priorities.
That’s a great time for you to buy.
Don’t think of it as taking advantage of another person’s hard times. Because you’re not.
What you’re doing is providing some much needed financial relief.
And if they’re willing to get rid of a car they don’t need for a rock bottom price, why not take them up on it?
if you don’t buy it. Someone else will.
Never, never, never finance a depreciating asset for more than four years. For one thing, no matter how much you spend on a car.
You’re upside down (that is: you owe more than the car is worth) once you roll off the lot.
Second, cars are considered old once they hit eight years. If you have to finance, consider an expensive car that doesn’t depreciate as fast.
If you take on a 72- or 84-month loan on your car (as is becoming common), you’ll be upside down in the car throughout the life of that loan, which equates to almost a decade.
That’s just not good financial practice.
Not only that, but you’ll save yourself thousands of dollars in interest by not going the finance route.
8. Be Flexible
I put this one near the bottom because depending on who you are and the car you want to buy this could work. Or not.
Do you have to get the model with the yellow contrast stitching when the red will do? Maybe you want the car with the analogue clock, is it that big a deal if the clock is digital?
If you know where to compromise sometimes you can get an expensive car for significantly cheaper than you thought possible.
Every car has its expensive top of the line models with cheaper variants below it.
The reason I hesitate with this option is because in my experience it still left me longing for the car I actually wanted.
And I wound up getting rid of the car I bought after less than six months of ownership.
In hindsight, I should have kept the car and upgrade it with the parts I wanted as I could afford it.
The original owner was even offered to drop in a new engine for me.
Live and learn.
9. Buy Salvaged
I almost hesitate to suggest this one too. But hear me out. Salvaged titled cars can mean huge savings.
A salvaged car is one that has been deemed totaled by an insurance company.
The thing is there’s different degrees of what insurance companies consider totaled.
Example: I had a car that was involved in an accident (the rear passenger bumper was hit). I was able to drive the car home on the freeway safely.
After the insurance company inspected the car, they declared it totaled. But when I looked at the damage myself, only the floor panel in the trunk was bowed from the impact.
Anyone that bought that car would only need to replace the bumper and you’d never the car was ever in an accident.