Are you thinking of buying an eye-catching yet functional luxury car? This article will enlighten you on luxury cars, the cost of buying luxury cars, Luxury Car Finance, How To Avoid Luxury Car Finance? When To Avoid It?, and When Not To?

What are Luxury Cars?

Luxury cars are a category of cars that offer exceptional comfort, equipment, amenities, quality, performance, and status relative to other cars.

Bentley Flying Spur, Mercedes EQS., Mercedes S-Class, Rolls Royce Ghost, BMW 7 Series, Bentley Continental GT, Range Rover, Rolls Royce Phantom, Lexus RX, Lexus NX etc. are a few examples of luxury cars.

Let’s have a look at the significant features of luxury cars:

1. The Leather Interior

Soft, plump, and fragrant leather is one of the prominent features of luxury cars. The touch and the comfort you will feel in them are not usual.

Many luxury car companies offer their customers wide options to customise their leather interiors too.

2. Cooling Features

Many luxury cars come with inbuilt cooling features. The benefit of these facilities is that you won’t stick to leather in the scorching heat. Even in the hot sun, you will feel the wintery breeze in the luxury car.

Such features include cooling upholstery, cooling steering wheels, and even inbuilt refrigerators.

Similarly, to help you through winter months, they feature heated seats and heating options for the steering wheel.

3. An Exceptional Package Of Entertainment

High-end luxury cars have their own tablet with storage that plays your best-loved songs and movies. Unlike in regular cars, this is at the front of the passenger seats.

If you are going on a family trip in a luxury car, your children can enjoy their favourite cartoon movies on the tablet in front of their seats. What a fantastic way to calm them down!

4. Aroma

Most luxury cars come with aroma diffusers. You can select the scent for your car as per your emotions or season, and you are good to go.

With mesmerising aroma, you will feel like you are riding in heaven.

5. Night Vision

Night vision is a really helpful feature that will help you identify pedestrians, cyclists, and other hard-to-recognise movements in the dark.

This feature ensures that other people on the road are safe, just as you are…

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We covered the differences of Luxury Cars vs Prestige Cars vs Exotic Cars in a previous areticle, if that’s what you keen to learn.

Now let’s turn on to Luxury Car Finance. What is it?:

What is a Luxury Car Loan or Finance?

Not all are born with silver spoons in their mouths. Do you agree? Some people can instantly afford a luxury car with little planning, while others have to buy it on loan.

If you belong to the latter category, this section will show how to buy a luxury car on loan.

Luxury vehicle loan options are almost similar to normal car loans, barring luxury car loans being generally greater in amount and considered ‘high risk’. A luxury vehicle’s cost may start from well above $60,000, so taking out a loan that size is a major commitment.

Luxury car loans are available with secured or unsecured financing and fixed or variable interest rates. Business auto loans are another possibility.

Regardless, financial institutions (e.g. banks) consider these loans are ‘high risk’ compared to regular car finance, hence may offer you a slightly higher interest rate. In other words, these loans are likely too expensive to service compared to standard car finance.

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Factors that matter while getting a loan for a luxury car include the following.

1. Your Financial Picture

Your financial picture shows how much money is going out from what is coming in and, ultimately, how much remains for paying bills and debts.

In other words, the higher the surplus after all your monthly expenses, including the monthly loan repayment, you can likely service the loan.

2. Your Credit Score

Your credit score confirms how reliable you are in repaying the loan. Lower the your score, it is riskier for your lender to lend you the money.

3. Your Annual Income

It is the amount of money you receive from your employer or business in the year before taxes.

4. Debt-to-income Ratio

It is the total debt divided by your annual income.

The purpose of the debt-to-income ratio is to know whether you can afford to pay back the money you are about to borrow. This also confirms the serviceability of your loan.

You can shop for a car loan online or from local financial institutions. What’s important is to compare a wide variety of loan offers for luxury cars and the types of cars accepted by those lenders.

Some lenders may finance luxury cars aged up to 5 years. Some may lend towards certain luxury car brands only.

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Once you short-list a few lenders based on their lending criteria, it’s time to negotiate between them to finalise a loan product application requesting a Preapproval Letter.

Before visiting a dealer, you can be preapproved for a loan from a lender of your choice and compare the conditions of that loan with those offered by a lending company or other dealer partners.

Regardless, you need to remember that there are additional costs involved with purchasing a luxury car beyond the sales price. They can be added up to a few thousands too… Be prepared!

Costs Associated With Buying A Luxury Car

Before buying a new luxury car, you should know about all the costs associated with your purchase.

1. Stamp Duty

Stamp duty is the tax you must pay while buying a car, varying from place to place.

In Australia, this varies between 2% to 5% of the sale price if you buy a cheap luxury car.

2. Registration Fees

The fees vary between $100 to $300 that you have to pay to register a car in your name.

3. Maintenance And Fuel Costs

Of course, luxury cars don’t run on water: you have to pay for fuel or electricity.

Also, the servicing costs are unignorable. During major servicing schedules, you will end up paying a few thousands.

4. Monthly Loan Repayments

A majority, 59% of Australians, have a car loan, and that can be a considerable cost to their monthly budget.

That’s why you must compare car loans and their features to find a fair offer on your auto loan. This will ultimately affect how much you’ll pay in monthly instalments.

5. Car Insurance

Insurance is a must to protect yourself from unexpected financial emergencies, such as those arising from car accidents.

Car insurance premiums for luxury cars are costly. You have to pay the premium monthly or annually.

6. Modifications Expenses

Sometimes you may want to add additional features to your car. For example, a head-up display. For that, of course, you have to pay the extra price.

Remember, nothing comes for free!

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Some Factors To Consider Before Buying A Luxury Car

  1. Ask yourself why you want to buy the car?
  2. How will the luxury car help you?
  3. Should you worry about the running cost?
  4. What ‘luxuries’ do you want in the luxury car?
  5. What is most important? Car reliability (e.g. Lexus) or social recognition (e.g. Mercedes Benz)

Answers to the above questions will guide you through finding a reliable car.

When Luxury Car Finance Is Worth It? When Is It Not? And, How To Avoid Luxury Car Finance?

You must be wondering whether luxury car finance is worth it or not. Let us see the situation where luxury car finance is beneficial.

If you have between a five-figure and six-figure salary, the best option is to buy a car on loan and pay the monthly instalments. This way, you don’t have to bear the financial burden. The monthly payments can lessen the impact on your finances and savings.

On the other hand, if your salary is 7 figures or above, you can save your money and buy it in one go without any instalments. In such a case, luxury car finance is not worth it at all.

When Renting A Luxury Car Is A Better Option?

In our view, renting a luxury car is beneficial in the following scenarios.

1. If You Are The Kind Of Person Who Gets Easily Bored With One Car.

In this case, renting a luxury car is the best option for you.

You can rent any car you want any time for ‘x’ number of days. If you get bored driving one kind of rental car, you can hire another car.

Remember, this ‘lifestyle’ can be very costly, although it is most men’s dream.

2. If You Would Like To Try Out A Luxury Car, Before Buying One Or Just For Fun.

Also, if you are heading towards buying a new luxury car, you should first try numerous luxury cars before buying the final one. Trying different rental cars will help you choose the best one for yourself.

For example, if you have never driven Ferrari or a Lamborghini before, trying a rental Ferrari or Lamborghini is a good way to make yourself well-versed in it.

3. If You Are Visiting A New City And Would Like To Use The Opportunity To Rent A Luxury Car.

Imagine you visit Adelia from interstate where you will anyway need a car for travel when you are in Adelaide. In that case, you could be better off renting a luxury car in Adelaide. Explore beautiful Adelaide in an unforgettable way!

4. If You Are Financially Savvy And Can Afford A Luxury Car.

This is fundamental and probably the most important in this list. You must be financially capable before jumping into a luxury car.

One bitter thing about luxury cars is that they involve heavy running and maintenance costs. If you can’t afford those costs, you should rent a luxury car rather than buy one. In that case, the financial pain will be only during the time you rent the car.

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5. If The ‘Feel Of Prestige’ Is Important To You. 

Those who rent or buy a luxury car value the ‘feeling of prestige’. That’s why they choose a luxury car in the first place.

5 Benefits Of Renting A Luxury Car Instead Of Buying

1. Affordability

Luxury cars may not be as reliable as normal vehicles, and they may end up eating your bucks at purchase, taxes, running and maintenance.

On top of that, car insurance for luxury cars is high too. You may have to pay a heavy premium every month.

Of course, you don’t have to deal with such heavy expenses long-term when you rent a luxury car.

2. Practicality

If you want a car that you can ride to the office daily, the luxury car may not be convenient unless the ‘feel of prestige’ is very important to you.

Secondly, it’s not wise to use a luxury car for daily commuting as the ODO mileage increases the car depreciates faster.

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Above all that, in case you won’t have peace of mind after parking your car in the parking space as you will always be scared of your car getting scratched or dinged by negligent drivers.

So, hiring a luxury car is better than buying one if your need for a luxury car is short-term. Otherwise, use a regular car for daily commuting and buy or rent a luxury car for weekend funs.

3. Commitment

On a scale of 1 to 10, how passionate are you about buying a luxury car? If you are, say 8-10, you must definitely buy one.

Lesser than 8 means you just like the idea of it, and buying it may not be that satisfactory. In that case, you should go for the rental luxury car as many times as you want.

You may develop or kill the passion for luxury cars by driving more rental cars. At least by knowing they are available for rent when you need them.

4. No Worry About The Car Being Stolen

Luxury cars are a significant target for car thieves. There is no guarantee that your luxury car won’t be stolen. So, you should ardently follow the saying, “precaution is better than cure.”

To have peace of mind, you can do either of the below-mentioned things:

  • Take theft-prevention measures
  • Choose to rent over buying a luxury car, only when you need a luxury car

5. Repairing Costs

Nobody knows what’s in the future unless they are a prophet. You never know when you will meet with an accident, no matter how competent a driver you are.

Just imagine if you meet with an accident while driving your luxury car; spare parts and repair costs will turn you into a dry leaf. If you were renting at the time, your Rental Excess Insurance would kick in to save your money and time.

So, to avoid such hassle, it is recommended to rent a luxury car instead of buying one through finance.

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Luxury cars are everyone’s dream. Why not? As they are heavenly. You can purchase a luxury car depending on your income streams and car loan-paying capacity.

But experts say that renting a luxury car is more beneficial than buying one to have more peace of mind. That’s especially true if you are still not financially savvy enough to afford a luxury car easily. Despite that, if you still wish to buy a luxury car, you should consider all the costs (short-term & long-term), especially the challenges of luxury car finances and its pitfalls.

Thanks for reading! If you are living or visiting Adelaide, Rent A Prestige Car – Adelaide could guild you in finding an enjoyable luxury car to drive.