Many luxury cars cost over $100,000. Some luxury cars, such as Bentley, Lamborghini, and Ferrari, can cost even more than that. Given the exorbitant prices, you're probably not alone in thinking that only rich people can drive these cars.
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But just because wealthy people can afford these cars doesn't mean they will actually buy them. In fact, many wealthy people choose more economical or modest cars, such as Toyotas and Hondas.
If money isn't an issue, why do rich people continue to drive cheap cars? Here are the biggest reasons:
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depreciation expense
Cars depreciate in value over time. Expensive cars tend to depreciate faster than other options. Therefore, luxury cars are not a good investment for people who want to spend their money on something more meaningful.
“The problem with cars is that they're depreciating assets, which means if you put money into them, you're losing money,” says Jay Zygmont, Ph.D., CFP, founder of ChildFree Wealth. Told. “Rather than spending money on luxury cars, many of my clients are investing in themselves and their good lives. For example, my clients may have a simple car, , I’m having a great vacation.”
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reliability
Just because a car costs more doesn't mean it's more reliable. Many luxury cars are built to last about the same lifespan as non-luxury cars. However, even this does not guarantee safety.
More important than status or price is often the safety of the vehicle.
“Most of the millionaires I've worked with drive affordable, modest cars,” Zygmont says. “Wealthy people have a lot of Toyotas and Acuras in their garages. They focus on reliable vehicles, not flashy vehicles.”
“Some wealthy individuals prioritize practicality and functionality over luxury,” said Loretta Kilday, senior attorney and spokeswoman for Debt Consolidation Care. “They choose reliable, well-built cars that fit their lifestyle and transportation needs, rather than flashy luxury cars.”
thrift
Not all wealthy people are born with the proverbial silver spoon. The path to wealth often begins with a frugal lifestyle.
“Many wealthy people became wealthy because they were frugal. They lived a lifestyle that allowed them to build wealth even if they didn't make a lot of money. Even after they became wealthy. , they will continue their frugal habits if it makes sense,” says Melanie Masson, financial expert at Clearassurance.
“It makes more economic sense to drive a reliable basic car than to buy a luxury car that costs five times more,” she continued. “Luxury cars don't tend to last longer or retain their value any longer than average cars.”
discretion
Another reason wealthy people drive cheap or modest cars is because they have discretionary power.
“Some rich people don't drive luxury cars. [because] They don't want to be seen as wealthy wherever they go,” Masson said. “They want to blend in with the general public.”
The $40,000 BMW X1 is less impressive than the $345,000 Lamborghini Huracan STO.
mileage
Luxury cars don't always have the best fuel economy. Let's take the 2024 Lamborghini Huracan STO as an example. Total MPG is about 15. The 2021 BMW X1 has a combined MPG of 26.
Gasoline prices may not be a top concern for wealthy people, but the inconvenience of having to fill up frequently at the pump is still there.
rising costs
Owning a car is becoming more expensive every year. Not only do luxury cars lose value quickly, but you also have to consider other ongoing costs.
For example, more expensive vehicles tend to have higher repair and maintenance costs associated with them. You may also be subject to higher taxes and other fees.
Because these vehicles are expensive to repair, insurance premiums can also be quite high. According to MarketWatch, the national average cost of full coverage auto insurance is $2,008 per year. Luxury cars typically cost between $2,200 and $3,200 per year.
different priorities
Even if they technically have the money, many wealthy people prefer to invest it elsewhere.
“Several [rich people] Prioritize financial prudence and long-term wealth accumulation over ostentatious displays of wealth,” Kilday said. “Instead of spending money on expensive cars, wealthy people choose to drive more modest cars. [often] Focus on building your investment portfolio. ”
Masson adds, “Wealthy people often would rather spend the difference on rising property values. They may invest in artwork or other collectibles. They tend to invest in their homes, so they can invest in their homes.”
Like everyone else, many wealthy people prioritize their health and experiences over material possessions. If buying a cheaper car means you can spend your money on other, more fulfilling things, you're more likely to choose that over a more luxurious car.
But of course, everyone is different. What one person prioritizes can be the exact opposite of what another person does.
“The key is to understand what's important to you,” Zsigmont says. “If owning an expensive car is part of what makes your life great, then do it. If not, focus on reliability and put your money into things you really care about.” .”
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This article originally appeared on GOBankingRates.com: 7 Reasons Rich People Drive Cheap Cars
