Many luxury cars cost over $100,000. High-end cars like Bentleys, Lamborghinis, and Ferraris cost even more. Given their exorbitant prices, you might think that only the wealthy can afford to drive these cars.
But just because the wealthy can afford these cars doesn't mean they do: many of them actually opt for more economical, more modest cars like Toyotas and Hondas.
If money isn't an issue, why do rich people still drive cheap cars? Here's the biggest reason why.
Depreciation
Cars depreciate over time, and expensive cars tend to depreciate faster than other options. That's why luxury cars aren't a good investment for people who want to spend their money on more meaningful things.
“The problem with cars is that they are depreciating assets, which means that if you spend money on them, you lose money,” says Jay Zigmont, PhD, CFP, founder of Childfree Wealth. “Many of my clients invest in themselves and a great life, rather than spending money on a luxury car. For example, my clients may have a modest car, but they also take great vacations.”
reliability
Just because a car is expensive doesn't mean it's reliable. Many luxury cars are built to last roughly the same amount of time as a regular car, but that doesn't guarantee safety.
Often more important than status or price is how safe the vehicle is.
“Most of the super-rich people I've worked with drive affordable, modest cars,” Zsigmont says. “Their garages are full of Toyotas and Acuras. They care about reliability, not flashiness.”
“Some wealthy people prioritize practicality and functionality over luxury,” says Loretta Kilday, senior attorney and spokesperson for Debt Consolidation Care. “They choose reliable, well-built vehicles that fit their lifestyle and transportation needs over flashy luxury vehicles.”
Frugality
Not all wealthy people are born with a silver spoon. Often the path to wealth begins with a simple life.
“Many wealthy people got rich 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 become wealthy, they often continue their frugal habits, if it makes sense,” says Melanie Masson, financial expert at Clearsurance.
“It makes more economic sense to drive a reliable regular car than to pay five times more for a luxury car,” she continued. “Luxury cars don't tend to last as long or hold their value as well as regular cars.”
discretion
Another reason why rich people drive cheap or modest cars is because it gives them discretion.
“Some rich people don't drive luxury cars. [because] “They don't want to be seen as wealthy everywhere they go,” Masson said. “They want to blend in with the general public.”
The $40,000 BMW X1 doesn't stand out as much as the $345,000 Lamborghini Huracan STO.
Mileage
Luxury cars don't necessarily get better fuel economy. For example, the 2024 Lamborghini Huracan STO has a combined fuel economy of about 15 MPG. The 2021 BMW X1 has a combined fuel economy of 26 MPG.
Gas prices may not be a major concern for wealthy people, but the inconvenience of having to fill up at gas stations frequently remains.
Rising costs
Owning a car gets more expensive every year. Not only do luxury cars depreciate in value quickly, but there are other ongoing costs to consider as well.
For example, expensive cars tend to cost more to repair and maintain, and they may also be subject to higher taxes and other fees.
These vehicles are expensive to repair, and they can be quite expensive to insure. According to MarketWatch, the national average cost for full-coverage auto insurance is $2,008 per year. Premiums for luxury cars typically range from $2,200 to $3,200 per year.
Different priorities
Even if the money technically exists, many wealthy individuals would prefer to invest it in other things.
“Several [rich people] “Financial prudence and long-term wealth accumulation should be prioritized over flaunting wealth,” Kilday said. “Wealthy individuals who choose to purchase more modest vehicles instead of spending money on expensive vehicles are [often] We will focus on building an investment portfolio.”
Masson added: “Wealthy people often prefer to put the difference into assets that will appreciate in value. They might invest in art and other collectibles. They could also invest in housing, as homes tend to appreciate in value.”
Like anyone else, many wealthy people prioritize health and experiences over material possessions, and if buying a cheaper car gives them more money to spend on other things that they find more fulfilling, they're more likely to choose it over a luxury car.
But of course, everyone is different, and one person's priorities may be completely opposite to another person's.
“The key is to determine what is important to you,” Zsigmond says. “If having an expensive car is one of the things that makes your life great, then do it. If not, then prioritize reliability and spend your money on the things that really matter.”
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