Why Purchase an Expensive Car?

Hi everyone,

For me, I only need a cheapest possible reliable car, with acceptable comfort, think Corolla. I sometimes wonder why people spend 30k+ for a car (and perhaps a bit more for a normal average reliable suv). I know of some of the reasons below, but if you let me know what other reasons that I don't know, that'll be awesome!

  • you're young (say 18-24?) and you buy the best car you can afford to impress people around you.
  • you're rich, you got everything, and a luxury car is the best spend for your unused money
  • you get extra money from nowhere (parents, lotto, etc) and quickly buy the car you've been wanting (without much thought)
  • you buy to get good impression from your clients
  • you just like the car (like anything else, really) the looks, how quick it goes, etc

I'm wondering if there's a reason where the benefit will weigh more than the cost? Please enlighten me!

Thanks!

Comments

  • +71

    30k+ is still low yield investment

    go 80k for high yield investment

    • +1

      I was thinking of putting 15k+ but people have different requirements (bigger family = bigger car), hence I put 30k

      • +7

        Some people prefer extra features related to safety. Last week my friend's and other person's life was probably saved because he almost hit a car from behind at 80 km/h. He would've gone through the car in front, if it wasn't for auto braking feature of the car he was in. His car stopped merely 1 or 2 meters behind the car in front. But yeah, he is stupid for not paying attention on the road either.

        • +1

          If it weren't for the fact that other innocent people would also be injured, I'd say let Darwin do its job.

        • +7

          @HighAndDry: So if someone you loved got into an accident because of their fault, you would want them to die, so less stupid people on the planet? You never made mistakes? What a weird way of thinking..

        • +5

          I wish that I didn't have to the use the auto braking feature of a car…

          But after owning my car for more than a year, I managed to feel the usefulness of that feature when the car in front of me in all of a sudden make a left turn at an intersection without an indicator and slowed down abruptly…

          Yes its true that in this case I will be at fault cause I didn't leave enough gap… But the auto braking feature saved me from my mistakes indeed.

        • +7

          @anonymous01:

          So if someone you loved got into an accident because of their fault, you would want them to die, so less stupid people on the planet?

          Can you ever really love a stupid person?

          And BTW: *fewer

        • -11

          @anonymous01: Let's get one thing straight:

          You never made mistakes?

          Not paying attention to the road isn't an accident. You're very obviously doing something intentionally if you're looking away for so long you need your car to step in and brake for you. And no - I'd have far more sympathy for the people in the car in front than I would for the person who's driving negligently and so injures others. It's not the kind of mistake I'm willing to excuse.

        • @Scrooge McDuck:
          Roses are red, violets are blue,
          Stupidity doesn't matter, if the love is true.

          Those who tasted true love are *fewer than few,
          Coffee club cancelled the membership, BOOOOOO!

    • +8

      A car is usually not a smart investment.

      • -3

        A Car will never be an investment.

        • +19

          Ever heard of an investment vehicle?

        • +3

          It can be, but only if you're Lindsay Fox and you are buying vintage ferraris and the like.

        • +4

          @Masterpupil: Heaps of JDM cars from 90s have doubled their value.Its not just the limited edition exotics.

        • +6

          @Scrooge McDuck: Only if you work for Westpac.

        • @JajaMinx:
          W______ _anker
          _estpac B_____

        • @Kangal:

          __estpac B_____
          W______ _anker

      • -1

        A car is as much of an "investment" as a mobile phone or a computer is..

        • +1

          A car is as much of an "investment" as a mobile phone or a computer is..

          Our business requires those three items (plus other assets) to operate. These are important assets and it would be impossible to work without them. We’ve for that reason invested a great deal of capital so that they can give us good returns.

        • -1

          @whooah1979: Thanks for the downvote mr muppet but that's not how it works, read what I said again before you spout bullshit. A car is as much of an "investment" (= GAINS VALUE) as a phone or computer is (both LOSE value). It is a UTILITY, i.e. it provides FUNCTION not VALUE.

        • -1

          @Levathian: I think they agreed with you - to their business, all three - mobile, computer, and car - are investments.

          An investment isn't limited to only making money through capital gains (increasing in value). Companies invest in PPE all the time and they depreciate too - the 'investment' part comes from the fact that they are assets used to generate income.

      • +1

        It is if you're a car dealership.

    • +3

      Came here just for this comment.

    • Buy Quarkchain for high yield investment.

  • +66

    Some people like to spend money on things they like. You can't reconcile an emotional desire with a rational argument. You may prefer an inexpensive car, but I'm sure there are other products/services that you are happy to pay a premium for that others would scoff at.

    • Thanks! Yes that's the last item on the list.

    • +21

      This.

      At the end of the day, although adult life is full of responsibilities, life is to be enjoyed. Of course, not at the expense of being financially irresponsible.

      Some choose to travel often, some choose to have an expensive car. And some choose to build the world's biggest Eneloop collection….

      • Hahahah eneloop collection

      • +1

        I agree. I've spent more than an expensive car worth of money into travelling. In my 20's, I went to Europe for 8 months, South America for 3 months, USA a few times and on other short trips. If I'd bought my house earlier, I'd have almost paid it off now.

    • +24

      I am a big believer in this.

      Some people feel the need to cheap out on everything, food, furniture, life really. For what, when they die the kids get it all and they will spend it.

      Life is for living, live it, buy a nice car, or a nice steak, or a nice hat or jacket or whatever really. Just don't live like a pauper your whole life. I believe that style of living effects people socially. Always saving, skimping, always have to get home, don't go to work functions, don't go out for dinner with the wife and kids etc. These social places are where social skills and happiness come from, not sitting at home with the family every night because they don't want to spend 60$ on a nice dinner out.

      Horrible life it must be

      • +51

        You're on the wrong website mate.

        • +17

          Nah, I agree with him. I think there are people on this site because they genuinely need to save 4% on eggs, and some people are on here because they have disposable income and see a shiny new thing for slightly less than it normally costs and decide to buy it.

        • @shamowfski:
          this needs more upvotes.

      • Logged in just to upvote @bennos and @shamowfski

    • +2

      Maybe. What you really can't do is lump things into a box labelled 'emotional crap' and then refuse to think about it

      These things do run on logic and reason, it's just the framework the logic exists within might not be one most people are familiar with.

  • +6

    Ask unistudent1

    • -1

      Do I private message him/ her to check this forum?

      • No just buy the car you want and rebadge it as the top of the range model, just to save you a lot of time and your sanity.

        • +15

          And you forgot to say, get on a forum and ask inanely redundant questions and make mention of your AMG A200 as much as you can.

  • +2

    Why buy anything at all, cause you want something to help with your enjoyment of life.

  • +2

    Also people who spend a lot of time in their car probably want to enjoy most of that time in it.

    If people need to spend a lot of time commuting based on their home and work locations, I can't begrudge them for wanting to enjoy their commute that may take 3 hours return a day (12% of their day)

  • +4

    A more expensive car can make sense if you are a business owner. Depreciation + interest are all claimable business expenses.

    • +6

      Thanks! But still, you end up with less $ in the bank?

      Example, say the person has 200k gross and 30% tax

      1. buy 30k car, therefore tax on 170k = 51k, net in bank = $119k
      2. buy 75k car, therefore tax on 125k = 37.5k, net in bank = $87.5k

      While the decrement of $ in bank (31.5k) is less than the increment of the value of the car (45k), you still get less $$ in bank

      • +3

        Some of them don't buy outright. They do it through novated lease (or some sort) where portion of the expense can be 'tax-deductible'.
        And when you earned >$180K, your tax bracket is > 45% + medicare n whatever levy

        Though, it is true that you ended up going to spend more (less $ in the bank). But some of the cost is somewhat getting offset by paying less income tax.

        • This is the same as negative gearing. As many have said, it's like I pay you $1, and you give me $0.45 back. I am still $0.55 out of pocket.

        • +1

          @ymmf: The difference between this and negative gearing is you will probably make a capital gain on a negatively geared property, whereas you are for sure going to lose money on a car.

        • -1

          @charlesli679: not for a while (assuming sydney and melbourne) the outlook doesn't look for good for the next few years.

        • @lowlifesphere: Just like with Bitcoin, house prices may fall 10-15% in a year but they've still doubled in most suburbs over the past 5-10 years.

      • +5

        Some seem to think tax deductible means from their tax bill rather than taxable income.

      • Yes. But say you have to buy a car anyway. You could say that he bought a 45k car for 31.5k. If it is for a business and the car is under 65k, they get the GST back too.

        For some people.
        Having a nice meal going out vs cooking at home, less $$ in bank if you go out.
        Going out on a Saturday night vs Netflix, less $$ in the bank if you go out
        Going to the gym vs running in the park, less $$ in the bank if you go to the gym
        Having a takeaway coffee vs Nespresso/Nescafe, less $$ in the bank if you have takeaway

        The same question can be asked for all of the above (the money is just on a different scale)

        Of course you will have less money in the bank everytime you buy something. Afterall, this is OZBargain, we are all here just trying to get the most out of the money we choose to spend on various things. If your objective in life is to make as much money and not spend it on any luxury goods (economics term, not luxury brands), that's fine. But life isn't about a competition of bank balances and assets. Obviously spend within your means and have some savings/assets, but it shouldn't be the only goal.

  • +2

    These days there isn't so much of a gap in qualty, reliability & technology between jap/korean cars and high end euro cars so agree not worth buying expensive unless it's your desire.

    • +1

      With declining quality of Mercedes, a Lexus is often superior.

    • Agree

  • +5

    Some people want to look rich so they buy the flashy car.

    • +2

      A lot of this

    • i know someone who bought a brand new $32,000 Accord on loan, then after a couple of years, could not afford his $200 weekly rent and got evicted…

      • +2

        Good thing he bought that car - somewhere to sleep

  • +7

    you have the money, you do whatever you want. And there's definitely a difference (huge) between high end euro cars and jap/Korean cars lol.

    • +2

      Not necessarily. I would argue that a high end lexus is comparable to a high end mercedes but for a fraction of the cost

      • +2

        Do argue

      • -1

        Lol Lexus.

        • -1

          True. Lexus = Upbadged Corolla

        • +1

          @Musing Outloud:

          Corolla being the best selling vehicle in the world makes toyota laugh all the way to the bank.

        • @Musing Outloud:
          People who don't know about cars should not comment.

      • -1

        Depends. Features and quality? Definitely. Performance? No - the top models from European brands are still a step above even the best models from Japanese/Korean manufacturers… except for maybe the Kia Stinger.

        And then there's brand name cachet. Which is still a thing and - if handbags, watches, etc are any guide - still hugely important.

        • +6

          Showroom euro are nice until the warranty expires. Lexus like toyota may run until we’re grey and old.

        • The finer details are lacking from a Stinger. But it's also half the price of it's more refined competitors.

          The new BD Cerato though… That is nice for a $26,000 car. The only thing it lacks is air conditioned seats.

      • +5

        Any Lexus would put any euro car in the same segment to shame in terms of build quality / reliability and standard equipment.

        • +5

          Lexus interior design cues are very…. Toyota influenced. Personally not a fan.

        • -1

          Lexus got 99 problems but … nevermind

        • @zeomega: When was the last time you've driven one?

        • @elektron:

          Drove the ISF my friend bought not too long ago. Didn't like the transmission nor the interior. Engine was decent, but still prefer the c63 over the ISF for a NA v8. Maybe it's the transmission?

      • nope lol

      • The NX and RX front is so overstyled and so ugly it is almost nice again.

    • +13

      R35 GTR.
      Forget EU coupes, supercar killer from Nissan. Ever heard of it?

      Lexus IS-F.
      Undercut Germans by 30K and just as good.

      Lexus LFA.
      Clarkson called it the best car in the world. Given the price, it should be.

      LC500.
      Show me a front-engined Euro coupe that's even in the same orbit.

      NA MX5.
      Europe lost its mojo so Mazda stepped in with fun and two things they lacked: build quality and reliability.

      Mk1 MR2.
      Dubbed cut-price Ferrari for a reason. Toyota took a Fiat X1/9, scaled it up 10% and chucked in a Corolla engine for instant classic.

      Mk2 Honda CRX.
      Europe had no response and millions of people are still weeping over that one.

      These are just the ones I remember. There's dozens more that proved a Euro badge is nothing but a sucker tax.

      • I am 100% totally agree with you, I drive a 2015 Subaru, WRX, Manual, AWD and Turbo, love it :)

    • 100%. Korean cars come with a warranty.

      30k is not high end. It's not even a German taxi.

  • +54

    I think this is stupid way of thinking. If you applied this logic to everything then literally nothing would matter in anything. Why buy a house, get an apartment, why buy an apartment, get a caravan, why buy a caravan, get a tent, why buy a tent, sleep in a cave, why find a cave, sleep in the open. You can utilize this deductive logic on food, clothes and any other basic life necessity. There is probably somebody out there going, why buy a corolla, my bike is good enough, and somebody going, why buy a bike, my feet work perfectly fine.

    • -25

      Not really. A car is a car. Is the difference between a $20K and a $100K car really worth a whole $80K? No! Is there a difference between a $200K apartment and a $1M house? Yes! Probably ten times the size, many more bedrooms, etc. If you have a large family you may need that extra space that you get for the extra $800K. No one needs anything extra that the $100K car gives you compared to the $20K car. The only thing that you MIGHT actually need is if you need say a 7 seater and the cheapest one that exists is $30K, or maybe the $40K one is way more reliable and cheaper to maintain than a $30K one. In which case it is smart to buy the more expensive one (after doing the maths). But buying an expensive car without a good reason like that (needing a 7 seater or being financially smart by getting an easier to maintain vehicle, or even having to have a nice car for your job eg taking clients out) is just dumb in my view. I would equate it with burning money for the enjoyment of seeing the flames.

      • +17

        That's if you think of it as just a tool. By that logic no one should buy a large flat screen TV either.

      • +1

        Well there are differences like different techs ie adaptive cruise control etc which some people need and some don't. Bigger and more powerful engines etc if they do longer distances or track their cars. Just because you don't appreciate these additional toys/features for the price doesn't mean its the same for everyone across the board and that its the same as a bigger house. Also your argument with an apartment vs house would be similar say 800k apartment vs a 800k house. An apartment has security (lock and leave), smaller (easier to maintain) may be in a more accessible location like closer to the city. Once again a single professional may find value in this price differential compared to a family who need the space.

        • -1

          additional toys

          Like you say, they're toys. Not something that anyone would need.

          Not sure what you mean about the 800K apartment versus house - I was just trying to show that a more expensive property normally results in actual tangible physical benefits, so it isn't the same as a more expensive car.

          The more expensive car to me is like taking a house at 200K, and adding gadgets like a self flushing toilet, smart lights, new paintjob, fingerprint lock, and charging 1M for it. The sort of gadgets that are kind of cool but you don't really need (and that are worth way less than the amount they caused the house to go up in price by).

          I mean if those gadgets are ACTUALLY worth that much to someone - I guess I can't argue with that. But have the people that buy these sorts of luxury cars actually sat down and thought - "would I rather have a car with all these gadgets, or a car with less gadgets plus a really nice month-long overseas holiday, or a kitchen and bathroom renovation, or a whole other car to give my kid for their 18th"?

        • +11

          @Quantumcat:

          "would I rather have a car with all these gadgets, or a car with less gadgets plus a really nice month-long overseas holiday, or a kitchen and bathroom renovation, or a whole other car to give my kid for their 18th"?

          Maybe they have thought that, and decided that yes, they would rather a car with all those gadgets instead of a second months long holiday (that they don't have leave for anyway) or a second kitchen/bathroom renovation in 2 years, or a second car for their kid (if they have kids).

          You know what's really unnecessary? Casting judgement on how others spend their money in a way which does not affect you AT ALL.

        • +3

          @Quantumcat:

          LOL exactly some people see the holiday as something that is tangible for the month and that's it… you cant touch or feel it after that month just photos so then people ask the question based on your logic is it worth it blowing all that money just for something you gain benefit from for a month? I personally don't! I also do agree with HighAndDry in saying you really should be abit more accepting of others' views and not try to force yours on others as gospel. And yes I take on board your views but just don't fully agree with it but I do respect it.

        • @HighAndDry:

          You know what's really unnecessary? Casting judgement on how others spend their money in a way which does not affect you AT ALL.

          Usually yes, but this topic specifically and explicitly asks to discuss this point (re: why do people buy expensive cars), so I see the OP's response quite fitting in the context.

        • +3

          @HighAndDry:

          You know what's really unnecessary? Casting judgement on how others spend their money in a way which does not affect you AT ALL.

          Actually that's mostly what goes on in the forums, have you really never seen someone tell someone else to hand in their ozbargain license because they spent money uselessly? These forums are about helping others spend their money more wisely and make it go further, I find it weird you are so shocked by someone thinking it a dumb idea to spend tens of thousands for very little. If you didn't ever have any opinion on what others do you wouldn't visit the forums until you had your own question.

          I think throwing money away is stupid, you think it's smart, so let's just agree to disagree.

      • +1

        No point in arguing with people who compare a car to a house. To begin with, one is a depreciating asset, another is quite the opposite. They don't quite understand how money works, and no amount of logical explaining will help.

        I fully agree with your view here, and the negative votes show how many people buy certain types of cars that are beyond their means, often by borrowing money, just to massage their egos. Not to mention a lot of these "premium" cars are often unreliable and usually cost a bomb to maintain.

      • $30,000 people movers are small hatches with a third row. Most van sized people movers start around $45,000.

        • +2

          Ok sorry I'm not well informed on cars :-p Adjust the numbers in your head when reading

    • I think this is stupid way of thinking. If you applied this logic to everything then literally nothing would matter in anything. Why buy a house, get an apartment, why buy an apartment, get a caravan, why buy a caravan, get a tent, why buy a tent, sleep in a cave, why find a cave, sleep in the open. You can utilize this deductive logic on food, clothes and any other basic life necessity. There is probably somebody out there going, why buy a corolla, my bike is good enough, and somebody going, why buy a bike, my feet work perfectly fine.

      So you're discrediting the logic based on the conclusion being unfavorable, what if it's correct?

      Ever heard of existential crisis, depression, anorexia or suicide? They aren't uncommon.

      Anyway the wind blows…

  • +16

    I can probably answer this. I'm 29, on a reasonable wage, and am looking at spending between $30-55k on a new car later in the year.

    I live regionally. There's no such thing as "public transport". You need a car. Whether it's a 5 minute drive to work or a 4 hour drive to see your family, you are in and out of your car multiple times per day. Given the importance of having a car, it's nice to have something that's comfortable, reliable, practicable and safe.

    I currently have a 20 year old 4WD I paid $5k for, and was my daily driver for around 12 months/25,000 km. Driving it is a chore. I think I've spent more than what I paid on it in repairs. I question how much life it has left in it. It is also completely devoid of safety features and while I consider myself a good driver, that doesn't give you an invincibility shield against serious accidents, which is particularly relevant when a lot of my driving is on single lane 100km/h highways. In short, I want to get rid of it.

    You lose money chopping and changing cars regularly. It therefore makes sense to buy something that I know will last me 10+ years. I want another 4WD. I realise a 4WD comes at a premium, but I enjoy the extra freedom they give (e.g. I drove around Fraser Island earlier in the year and want to go back). Also, because I like to fit accessories to my cars - e.g. bull bar, good driving lights, all-terrain tyres, etc - I want my cars to last because you don't recoup this expenditure on resale.

    So even though I will be financing a fair portion of it, I'm looking at buying a new or near-new 4WD (e.g. <5 years old and less than 80,000 km). As others have alluded to, I reckon it will bring me enjoyment, so why not?

    If it means anything I have already purchased a house and have done a little bit of travel, so I'm not putting all my eggs into one basket.

    • +1

      Cool thanks!

    • +3

      I'm in regional NSW and agree so much with this.

      • Reliability is a major factor, and this tends to come with newer vehicles. I am very mechanically minded, but no longer wish to drive around in old cars just waiting for the next thing to break.
      • My family is very important and I will only buy something that is at the top of safety ratings (20 years SES volunteer cutting people out of cars gives you an appreciation for this)
        -Lifestyle is important - I like to go camping, fishing, exploring so one of our cars needs to be a capable off-roader.

      Happily I owe nothing on my cars (Mitsubishi Triton and Volswagen Passat …yeah I know I said reliability is a factor and I drive a DSG Volkswagen….)

      FWIW - I don't fit any of the OP's categories for 'expensive' car ownership but this is likely because OP is rather close-minded and only sees his requirement for a vehicle as being applicable to everyone.

      • +1

        Passat is a very comfortable car though!

    • Agreed. In plenty of cases spending more is certainly justifiable when it gets you a car that's of better quality and isn't going to leave you stranded at the worst of times.

    • +5

      The cheapest way is to buy a car at 2 years old or so and sell at around 5 years, and repeat. This tactic minimises your depreciation losses, yet delivers very recent safety features which is your core need. Also carefully inspect the compliance plate to confirm the car really is 2 years old (plus 3 months shipping from OS) and not just 2 years since sale and 3 or 4 years since manufacture).

      Used car safety features: Links to ANCAP Choice

      Depreciation is your biggest expense (Investigate 3 yo residual end of lease values for models near 60% residual, rather than 40% - a net 20% outlay saving just for buying the right model): Choice

      Other running costs count too. Running cost guide: Cars Guide

      Insurance also counts in your running costs so get online quotes for your shortlisted vehicles. Also look for insurance rebates if you have particular features such as AEB, alarms or good theft ratings: Car Advice

      The above is what I'd call my Ozbargain guide to managing your car ownership costs.

      • This comment needs more upvotes!

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