Key takeaways

  • Luxury brands often offer top-of-the-line features at a high price point.
  • Fully loaded standard models may have similar features at a much lower cost.
  • Consider what you want out of your car and if brand name is important to you before you start shopping.

Luxury cars don’t necessarily have set features or a minimum cost. Each model is different — and often, real luxury comes down to your choice of trims. If you’re in the market for a luxury vehicle, you will have plenty of options.

Be prepared to research auto loans to ensure you can borrow enough and afford to repay it. And keep an eye out for used car deals that could help you find a luxury car without draining the bank.

How to decide if a luxury car is right for you

Consider factors like performance, safety and depreciation when shopping for the best car for your specific situation.

Is the performance better?

If a car’s performance is especially important to you, pay close attention to reviews detailing acceleration, handling and braking power. Although not always the case, many luxury car brands boast better performance.

Performance ultimately depends on the type of vehicle. For example, a sports car will likely have better acceleration and handling than an SUV, even if they are both manufactured by luxury brands.

Bankrate tip

Check ratings from third-party ratings like J.D. Power or Kelley Blue Book to see if the handling is worth the price tag. Less pricey cars can still be a pleasure to drive.

Do the safety ratings outperform non-luxury brands?

Another factor to consider when looking at a luxury car is the manufacturer’s safety rating. Luxury cars have a reputation for having higher quality parts and manufacturing standards — but there are plenty of safe vehicles under $25,000.

Still, a higher end vehicle may have better safety ratings for side or front impact and roof strength. It may also have top-of-the-line crash avoidance features like headlight brightness or crash prevention systems, among other factors.

The Insurance Institute for Highway Safety (IIHS) gives ratings to most new cars every year. When researching luxury cars, compare IIHS safety ratings against non-luxury brands.

Are the features available in a non-luxury brand?

While a luxury car may have interesting new technology, in many cases, it won’t differ significantly from other cars on the market. Infotainment systems, heated seats and many other luxury features are becoming standard, regardless of brand. More than that, today’s luxury car features tend to become tomorrow’s standard features.

List the features that are the most important for you. It might not line up completely with the standard trims offered by luxury manufacturers. Deciding what features you need or want in a vehicle will help keep your emotions in check when choosing between a standard or luxury model.

Is the investment worth the cost?

While there isn’t a set minimum price point that determines what is considered a luxury car, a luxury car will sell for a premium compared to non-luxury cars. Expect to pay more upfront and each month — even if you manage to score a competitive interest rate.

You should also consider that luxury cars cost more to maintain. You may need to bring your vehicle to an official service center to maintain your warranty. Repairs, parts, labor and regular maintenance will generally be more expensive. Make sure you budget for higher ongoing costs alongside the increased purchase price.

Bankrate tip

Take advantage of an auto loan calculator to understand how much your luxury car will cost monthly.

Luxury vehicles depreciate at a faster rate

All vehicles depreciate the moment they leave the lot. Unfortunately, luxury vehicles depreciate at a much faster rate than middle-tier competitors. Quicker depreciation means that you likely will not make back the money you spent on the vehicle when the time comes to sell. An oversaturated market, outdated features and expensive maintenance all play a role in a car’s depreciation.

  • More on the market: Luxury drivers tend to buy new vehicles every couple of years. This means that the number of available cars sometimes outweighs the number of buyers.
  • Models become dated:  Those doling out the extra cash for a luxury car tend to want all the bells and whistles. So, an older model will not receive the high price tag that you originally bought it for as models become outdated much faster.
  • Vehicle maintenance:  Trips to the body shop tend to cost more for newer or foreign models, negatively affecting the car’s resale value.

If you want luxury without extreme depreciation, consider shopping for vehicles that are better to purchase used instead of new. That way, you can enter the luxury space and avoid paying more for faster depreciation.

Consider a fully loaded standard car

What most people think of as a luxury car depends on the brand. Manufacturers like Lexus, BMW, Mercedes or Jaguar are considered to be luxury brands in many people’s minds. And while it’s true that cars from these manufacturers come with high-end features, you are also paying for the brand name.

Instead of a luxury brand, consider buying a fully loaded standard car. Even a car as basic as a Honda Civic has many trim options. Pricier trim packages offer higher-end features without the luxury car price tag.

Financing a luxury car

Depending on the type of luxury car you buy, you may be able to finance it with a standard auto loan. But if the price point is higher than traditional lenders cover, you may have to get creative.

  • Check with the dealer:  Luxury car dealers may have special financing offers or deals you can take advantage of. The manufacturer may also run specials to entice new buyers.
  • Consider a higher down payment:  While the standard down payment is 20 percent of the vehicle’s cost, you may need to put more money down to reduce the amount you need to finance. Use a down payment calculator to estimate your monthly payments and total cost.
  • Arrange your own financing:  You might be able to finance your luxury car with a personal loan. While you may be able to borrow more — some lenders offer up to $100,000 — expect higher rates.
  • Look into a luxury car lease:  If you are itching for a luxury car but aren’t sure you want to commit to a purchase, consider leasing. A lease offers lower monthly payments and much less risk. Plus, you’ll be able to upgrade every few years to take advantage of new technology.

The bottom line

A luxury car may be what you dream of, but it may not always be the right choice. Determine the features you want and consider whether the price point of a luxury car is worth it compared to the fully loaded model of a non-luxury brand.

Most importantly, know what you can afford. Always compare auto loan rates to get an idea of your monthly payment before you start shopping for specific makes and models.