Owning a luxury car most times indicate that a person is relatively accomplished. Truth be told, luxury cars usually look better. In fact, some of them have the best technology on automobiles. However, luxury cars can have huge financial implications on the long run.
This isn’t just about the cost of purchasing the car, it is also about some hidden costs that most people probably never even knew or considered at the time of purchasing their luxury automobile.
Before you purchase that luxury car, you need to understand that there are some hidden costs.They include:
1. Insurance
This is one cost you have to bear when you purchase a luxury vehicle. As expected, it would cost more to repair a luxury car and as such insurance companies collect higher premiums. This in turn means the cost of your insurance is dependent on the car. TrueCar.com says that the premium of a Top Toyota Camry is maximum of $33,000 while entry level Mercedes C300 starts at $40,000.
InsuranceQuotes.com also revealed that the insurance premium for a Toyota Sudan may come in at $1,500 every year while the premium on Mercedes costs $2,689 per year. That translates to an 80% increase for a luxury vehicle.
2. Gasoline
Another expense to consider before buying a luxury car is the cost of fuel. Luxury cars most times come with massive engines that are designed for high performance. As such, they are rarely fuel economical and they need premium fuel. AAA records that on a national level, the average for regular prices of gas is $2.48 for each gallon. The average increases to $3.01 if it is for premium prices.
Luxury vehicle owners in Illinois have to pay more. Regular prices for gas on an average is $2.62 for each gallon while the premium prices is at $3.37 for one gallon. This variation in prices can be made more obvious if you consider the longterm cost implication.
3. Repairs and Maintenance
It costs more to repair luxury vehicles. The parts of these vehicles are usually more expensive and the technicians that can handle the vehicles need to have gone through special training to be able to work on complicated models. Should you even decide to work with a non-dealer mechanic, it doesn’t exclude you from still incurring additional cost for repairing. Of course, vehicles that are not luxury cars also need maintenance. However maintaining and repairing them is often way cheaper.
Toyota is known for its recently launched car care initiatives. ToyotaCare is one of its purchases and that includes maintenance costs that are factory scheduled for 25,000 miles or the first 2 years. It also covers tire rotations, brake inspections and oil changes.
Mercedes provides a prepaid maintenance plan that starts at $769. MBUSA.com, the company’s website, stated that the package would help you save 30% on the costs of routine maintenance over 3 years as compared with when you pay each time you need to. The one-time payment covers the vehicle for 30,000 miles or 3 years. When the protection expires, then the difference becomes obvious.
YourMechanic.com released the ranking of how much it would costs to maintain each of the major automobile brands. It isn’t surprising that Mercedes takes top spot on list of the cars thathave the most expensive maintenance. It comes in after BMW and costs approximately $13,000 over ten years. Over that same period, maintaining a Toyota costs just $5,500. On a yearly outlook, maintaining a Mercedes costs an additional $750 than the cost of maintaining a Toyota.
4. Taxes and depreciation
Even though most people purchase vehicles without a prior consideration of the effect of depreciation on the ownership cost, depreciation does have an effect on the resale value of the car. The value of luxury cars keep dropping even after the depreciation rate of standard cars would have leveled off. This depreciation level is affected by the increased cost of repairing and maintaining luxury vehicles.
Kelly Blue Book contains a tool that aids for comparing the depreciation of a car over a period of five years. For instance, Mercedes would end up losing $27,000 by the fifth year while Toyota Camry would have lost $16,700 at that same time.
The choice to buy your car still depends solely on you, but it is important that you make an informed decision. Before purchasing a luxury vehicle, you should also put sales tax into consideration. Although your location determines your state tax, but the higher cost price of luxury vehicles obviously attracts more taxes.