How to Afford a Luxury Car Without Breaking the Bank

It is something that any car enthusiast has dreamed done: stopped and stared at a luxury car and wished they could trade in their current commuter car for a more plush model. Your standard 1.4 litre engine may get you to work fine, but the thrill of driving a high-end car would make your commute that bit more bearable.

The good news is, that affording a luxury car may not be as out of reach as you think. If you are smart, do your research and know where to look, you could upgrade to something a little more luxurious. Here are some ways to get a luxury car without breaking the bank.

Buy Used, Not New

When you think of buying a luxury car, you may picture a highly-waxed vehicle inside a shiny, glass-fronted dealership. However, buying a new car directly from the dealership carries a large price tag, something that many simply cannot afford. Instead of purchasing new from the factory, consider buying a used luxury car. Purchasing second-hand from the likes of RRG Group Ltd means you can still get a bigger engine, heated leather seats and all of the mod cons, but for a fraction of the original price. You also avoid the car depreciating up to 34.6% during its first year on the road.

Make Money From Your Car

When looking a buy a luxury car, you think of the horse power or comfy leather seats, but also think about how your car can work for you. If you are on a budget or looking to minimise financial impact, there are ways you can make money from your car. This includes: listing on a car share website and charging passengers to share your daily commute; branding your car with company advertisements, offering taxi or transport services, or even renting out during the day while you are in the office.

Affordable Payments

If used is not for you, then consider all of the finance options. There are loads of ways to pay for your car in monthly instalments, spreading the cost and making a luxury car more affordable. This includes a personal loan, hire purchase (HP), a personal contract plan (PCP), or even leasing options. In addition, if your car is to be shared between yourself and your spouse, or perhaps another family member, you could consider splitting the purchase price and running costs, meaning you both get a luxury car for a fraction of the cost.

Buying a luxury car does not have to break the bank. By choosing used, making money from your vehicle, or signing up to an affordable payment plan, you can own your dream car without breaking the bank.

There are Many Costs and Expenses of Car Ownership

The Cost of Car Ownership

For many people, especially in the south, owning a car is not a choice. It is essential to being able to get around and do what you need to do. However, owning a car is a major expense. While you may not think about it, there are many things that go into owning a vehicle. This includes the upfront costs to buy the vehicle, fuel, maintenance, taxes, fees and interest. These costs can vary greatly across the south.

Variances in Costs

To begin with, tax rates vary from location to location. When you buy a vehicle, you have to pay tax on your purchase. This can raise the overall cost of your vehicle by thousands of dollars, making your upfront cost quite high if you live in a state with a high tax rate.

Other costs that can vary greatly from location to location are those for registering your vehicle and getting the title. Generally, these are paid in the county in which you live. Some counties may charge more for the services than others. It may also depend on which city you live in. These costs can be quite low, like under $20, or they can be on the more expensive side.

A major area where costs vary from location to location is fuel. Everyone knows gas prices go up and down. One city may have low prices, while another is much higher. Then there is the variance between gasoline and diesel fuel. If you own a diesel vehicle, expect to pay more.

Your location may also impact the costs for maintenance and repairs. Some areas may have higher rates than others due to things like demand and competition. If you own a vehicle, though, you will need to get maintenance done at some point, so this must be kept in mind.

The last cost that can affect your cost of owning a car is insurance. Insurance isn’t as dependent on location, although location will affect your prices. It is more reliant upon your personal details, such as your driving record, credit rating, age, type of vehicle and number of drivers. You have some options when it comes to local insurance to help make this more affordable. However, some areas just naturally have higher rates than others, so it is something to think about.

Costs by State

There is not one southern state where owning a car is super cheap. There are always tradeoffs when it comes to costs. For example, North Carolina has some of the lowest prices for gas, insurance and registration, but the state has high repair costs. The same is true of Virginia. On the other side of things, there is Georgia where gas is still rather cheap, but you will pay out quite a bit for repairs and insurance.

Then there is West Virginia, which has low registration fees, but everything else is rather costly, like gas and insurance. Compare this with Mississippi, a state that is lower than average on every car related cost. Mississippi may be the ideal southern state for car ownership.

When it comes to owning a car in the south, you have a lot of costs to consider. Depending on where you live, you may need to shop more smartly for a car to get a better deal or you may need to be careful about getting an insurance policy so you aren’t paying too much.

How to Navigate Past Expensive Car Loans

For many commuters a vehicle is essential to get them to and from work. People with larger families may also need a vehicle to get the family places. Public transit often isn’t an option in small cities or towns. A large percentage of the population relies on a vehicle. But despite the best maintenance on a car, they still breakdown and need to be replaced. Often many people simply do not have the cash to buy a new car, yet they are hesitant to buy a used car more than a few years old. A car loan is how they’ll be able to obtain the best vehicle to suit their needs.  Selling your old car at online companies like We Buy Cars is a great way to get the down payment for a new one.

Obtaining a car loan can be a lot like obtaining the best mortgage. It’s going to take time and research to shop around.

There are many sources for car loans, so before you sign on the dotted line, scope them out first. Your first option is going to be directly from the car dealer. You’ll find that they may offer the best financing, after all, they want you to buy their car.

Your second option for a car loan is from your bank. If your credit report is outstanding, you may qualify for a low interest loan. You may also be able to obtain a second mortgage and get it tacked onto a once-a-month lump sum payment.

The third option is to get it from a company that specifically provides loans to individuals. If you go this route, check the interest rate and loan terms carefully. Often these companies are created for people who don’t normally qualify for an auto loan. This means that the interest rates will be exceptionally high.

If you’re considering the purchase of a new car, and you know that you’ll need to obtain a car loan, it can be of benefit to pull your credit report. There are many agencies that provide this service. This will allow you to learn your credit rating, and whether you need to fix any errors. It can be of benefit to you, as a higher credit rating means that you’ll be able to obtain the best interest rate possible.

If you’re a woman, you may also wish to be extra aware before obtaining a car loan. Many people will assume you have not done your research, and may try to take advantage of that. They’re out to make money after all. Sadly it’s still something that you need to be aware of before you begin your negotiations. It’s important to brush up on car and loan terminology. If you don’t understand something in a contract, be sure to ask.

You may also ask for what you want. Is it possible that they can drop the interest rate a half a percentage point? It can certainly help you out over time, but be of little risk to the lender.

By the time you’re ready to sign on the dotted line you’ll have found the best interest rate for your car loan. Soon you’ll be driving home in your new car!

Why buy a transmission when you can buy a new car?

I was creepin’ on Facebook the other day, when I saw a sparkly new car show up in one of my friends’ posts. After clicking around, I discovered my friend purchased a brand spankin’ new Jeep Cherokee.

I thought it was a little odd that she purchased a new car being that the last time I spoke with her she told me she was looking to quit her part time job at a local photography studio.

I can’t imagine a part-time photography assistant makes mad scrilla, but perhaps I’m wrong?

On Friday night, I attended a fundraiser for a youth group I am part of, YoungLife. While at the banquet, in walked Ms. Jeep Cherokee. We started chatting and I mentioned I noticed she had got a new car.

I asked her a little about the circumstances leading up to the purchase.

Because I’m nosy.

She told me that her former car’s transmission went out and it was going to cost $2,000 dollars to fix. With excitement, she further explained that her former car was only worth $900 dollars so it made no financial sense to fix it.

And that’s when she said, “So I went and bought the Jeep.”

It took every ounce of self-control to not do something like this…

picard_facepalm_by_nocturnalmarauder-d661t3i

 

 

I wanted, so badly, to know everything about her situation.

…I wanted to know how much the car cost.

…How much she put down.

…And what the heck she was thinking.

 

Instead, I smiled politely and said something like “Well that’s exciting.”

 

Since when did a $2,000 expense become a justification for a $20,000 loan?

I couldn’t imagine she put more than 10% down, which means she is not only the proud new owner of a Jeep Cherokee, but also a couple hundred dollar per month car payment.

I think what upsets me the most is that she is completely oblivious to the gravity of taking on such a big loan. I desperately want to sit down with her and ask why she thinks $20,000 is better than $2,000. Or at the very least, why she didn’t buy a $5,000 used car?

I know most of us PFers have encountered similar situations. You know, where someone says something that makes the PF nerd inside of you want to curl up in the fetal position and start sucking your thumb.

 What did you do?

Do you smile and politely pretend like your excited for them? Do you slap them across the face and tell them their dumb? Where is the line between expressing legitimate concern and sticking your nose where it doesn’t belong?

Moral of the story: depreciating assets suck.

We decided to give being a one car family a shot

Cars are freaking expensive. Even though both of our cars were fully paid off (’07 Scion tC and ’06 Honda Pilot) they still ate up a considerable amount of our discretionary income. Gas ($300/mo), insurance ($120/mo), and maintenance (call it $600+/year)  aren’t cheap.

So even though our cars were paid off, they were still costing us about $500 a month.

That’s insane and I think I would have projectile vomited all over the place had we had another $400+/mo in car payments to add to that.

Now that Baby Ninja is a thing, we realized my Scion tC had become nothing more than a glorified driveway ornament. I loved my Scion dearly, but the car only had two doors, and let me tell you a little secret; coupes and car seats don’t mesh. 

I sat down with Girl Ninja and pitched the idea of selling the Scion and trying out the one car household thing.

She was down. 

I put my car up on Craigslist and within a few weeks I fetched $9,500 for it, which was right at its Blue Book value.

Now I should remind you that I have a company car so while I’m out working, Girl Ninja still has our Pilot. That said, I’m not allowed to use my work car for anything other than official business. No quick stops at the grocery store, no driving with passengers, nothing.

So maybe we are more like a 1.5 car household?

It’s been about 6 weeks now, and so far we haven’t once thought to ourselves “Man, it sure would be nice to have two cars.” 

Perhaps this will change as time wears on, but for now we’re enjoying the almost $10,000 boost to our savings account and reduced monthly vehicle expenses. I’m sure eventually we will end up buying a second car, one with four doors of course, but so far this one car household adventure has been pretty fun.

How many drivers are in your household? How many cars do you have? Have you ever got online insurance quotes from a service like youi car insurance quotes online

 

CARpe diem

I don’t know how much gas is where you live, but in Seattle $3.95/gallon seems about normal. Girl Ninja and I spend about $200-$250 a month on gas. Thank goodness for a work vehicle, otherwise that amount would be another $100+ higher. Our insurance runs another $160/month.

Carry all these expenses out over a twelve month time frame and we’re averaging about $5,000 a year to drive our two cars.

FIVE THOUSAND DOLLARS!

Do you know how many California Burritos that is?

ONE THOUSAND BURRITOS! 

Driving freaking sucks. It sucks the money out of my wallet, and places it in to a depreciating asset.

That is no bueno.

Sure I could drive less or probably find cheaper insurance (we have full comp/coll coverage on both vehicles), but even that wont drastically reduce our annual auto expenses.

No.

The only thing Girl Ninja and I can really do to ensure transportation has a minimal impact on our budget is try to drive less, and drive our vehicles until they explode.

New cars depreciate like crazy (40% in the first four years). This is why I personally could not stomach a $400 car payment on top of the gas, insurance, and maintenance payments I previously mentioned we have.

The disdain I have for debt, outweighs the joy I’d get from driving a new vehicle. 

That’s just me though. I have plenty of friends that have car payments (many who read this blog in fact). They are all intelligent people and are by no means reckless when it comes to their finances. I realize that just because I don’t have an appetite for a car payment, doesn’t mean that someone else wont find them beneficial or helpful.

This is the very reason I love personal finance.

You do you, and I’ll do me. 

So reader, How much do your transportation costs work out to each month? Break it down by line item (gas, insurance, maintenance, and payment). After adding all these numbers up, are you shocked just how expensive driving can be (I was with our $400-ish a month obligation)? Where does it fall on your balance sheet (I’m assuming probably your second or third largest expense after your rent/mortgage and maybe food)?Do you hate car payments, find them a necessary evil to have reliable transportation, or love the ability to spread payments out over many years?

 

The bells and whistles.

Cars. They serve a simple purpose, to get one from Point A to Point B. While their purpose is pretty straightforward, the bells and whistles that come with them are anything but. From heated seats to cars that parallel park themselves, features don’t come cheap.

What’s more, cars are also the most expensive depreciating asset most of us will ever own. So today, I thought we’d take a look under the hood and see how dirty PDITF readers are riding…

The rules are simple, total up the value of whatever cars you own (if you were to sell them today) and share that value below. It would obviously be helpful if you also shared the year, make, and model.

Car 1: 2007 Scion tC, 59k miles, $9,500. Owe: $0

Car 2: 2006 Honda Pilot, 85k miles, $14,800. Owe: $0

 Total Vehicle Assets: $24,300

 

For those of you that lease, just pretend you owned the car.