If you’re in the market for a new or used vehicle, you might be considering if buying a luxury car is worth it. Since there isn’t necessarily a minimum cost or set of features that make a car a “luxury car,” you will have many options =.

How to determine if a luxury car is right for you

There are a couple of factors that you will want to consider when shopping for the best car for your specific situation.

Is the performance better?

If a car’s performance is especially important to you, you will want to pay close attention to the car’s performance ratings. Using them, you can measure factors like acceleration, handling and braking power. Though not always the case, many luxury car brands boast better performance.

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-pricy 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 ratings. Luxury cars have a reputation for having higher quality parts and manufacturing standards. That can often translate into higher safety ratings for side or front impact, roof strength and crash avoidance features like headlight brightness or crash prevention systems, among other rating factors.

The Insurance Institute for Highway Safety (IIHS) is an independent third-party organization that aims to reduce deaths, injuries and property damage from motor vehicle crashes. The IIHS gives ratings to most new cars in various safety-related categories every year. When comparing luxury car makes and models, the car’s IIHS safety rating is another standard to compare against non-luxury brands.

Bankrate tip

Before signing off on a luxury vehicle, consider Bankrate’s winners for the safest options for under $25,500.

Are the features available in a non-luxury brand?

From leather seats to sunroofs, comparing different makes and models of cars means comparing a plethora of features. What is important to you might not line up completely with the standard package options of a particular type of car. You might consider listing out specifically what features mean the most to you — that will help you as you look for your perfect new car.

Some higher-end features that many people are looking for when considering a luxury car include a top-end entertainment system, heated or massaging seats or smartphone integration. Deciding what is most important to you will help keep your emotions in check as you go new car shopping.

Bankrate tip

Remember that vehicle advancements are always progressing. And more than that, today’s luxury car features tend to become tomorrow’s standard features.

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 command a price premium compared to other types of cars. Cars are typically depreciating assets, meaning that their value decreases over time.

Also, consider that it’s common for the maintenance of luxury cars to be higher than that of non-luxury cars. Repairs, parts, labor and regular maintenance like oil changes will generally be more expensive. Make sure you budget for higher ongoing costs and the increased purchase price.

Bankrate tip

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

How a fully loaded standard car differs from a luxury brand

Luxury car doesn’t have a specific definition. What most people think of as a luxury car depends on the car’s make. Manufacturers like Lexus, BMW, Mercedes or Jaguar are considered “luxury” in many people’s minds. And while it’s true that cars from these manufacturers come with high-end features, you are also paying a bit for the cachet of 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 different trim options. While the basic package has standard features, pricier trim packages offer many higher-end features you might think are exclusive to luxury cars. Think about what types of features you are interested in and decide based on that.

Luxury vehicles depreciate at a faster rate

All vehicles depreciate the moment that you exit the dealership lot. But 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. Consider the following influences that lead to faster 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 without being stuck with money lost.

Financing a luxury car

Depending on the type of luxury car you buy, you may be able to finance it in much the same way you finance any other new car. But if your new luxury car ends up being more than traditional auto lenders will loan, you may have to get creative.

  • Check with the dealer. Luxury car dealers may have special financing you can take advantage of.
  • Consider putting more money down. If you are having trouble getting a car loan for the full amount of your purchase, you may need to put more money down.
  • Arrange your own financing. You might be able to finance your luxury car with a personal or home equity loan.
  • 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, you might consider leasing a new one.

The bottom line

A fully loaded standard car and a luxury car are both valid options, and no single answer will be right for everyone. Look at the different options that come with the cars you are interested in and ask yourself if you’re only paying extra for the name on the car. That will help you decide what’s best for your situation.