Luxury car buying: Financial advice from owners who have been there!

Even if you are an enthusiast there are enough and more ways to enjoy a great vehicle without breaking the bank.

BHPian wheelspinner recently shared this with other enthusiasts:

I'm at that stage in my career where the dream of owning a luxury car is starting to feel a little less distant, but the reality of EMIs and general life responsibilities is definitely keeping me grounded. Like many others, I'm juggling the desire for a little automotive indulgence with the need for financial prudence.

We've all heard the saying, "owning a luxury car is like raising an elephant." (haathi paalna). The costs, both upfront and ongoing, are significantly higher than your average hatchback. You see folks driving around in humble Altos while probably having enough wealth to own and maintain several supercars, and then you see others stretching themselves thin just to keep up appearances. I'm aiming for a sweet spot in between – a luxury car that enhances my life without emptying my bank account.

So, I'm turning to the collective wisdom of the BHPian community – those who have already taken the plunge into the world of luxury car ownership. I'd love to hear your experiences and insights, particularly on the following:

Financial Planning: How did you approach the financial planning process for buying your luxury car? What were the key considerations you factored in (e.g., depreciation, insurance, maintenance)?

Income Threshold: What would you consider a comfortable income level to comfortably own and maintain a luxury car in India? (This is, of course, subjective and depends on lifestyle, but a ballpark figure would be helpful).

Career/Business Strategy: What do you do for a living? (Feel free to be vague if you prefer). What career moves or business strategies helped you reach a point where luxury car ownership was attainable?

General Advice: What's your overall advice to younger professionals who are working hard and aspiring to own a luxury car someday? Are there any common pitfalls to avoid? Should they even be considering it at this stage of their lives?

I understand this is a personal topic, but I believe your shared experiences can provide invaluable guidance to those of us still on the journey. Your insights could potentially make a huge difference in how we approach our financial goals and automotive aspirations.

Looking forward to hearing your perspectives!

Cheers,

wheelspinner

Here's what GTO had to say on the matter:

Never, ever overspend or over-stretch. Enjoy your cars, but spend on them well within your means. When I could afford a Mercedes, I bought a City. When I could afford a BMW, I bought a Civic. When I could afford a new S-Class, I bought a used 5-Series.

Luxury car EMIs should NEVER affect your lifestyle (the way you live, the way your house is run, education, shopping, entertainment, holidays). Give me a "loaded" lifestyle over a "loaded" car any which day. A luxury car is the ultimate discretionary purchase and trust me, I've had the best times of my life (whether at the age of 21 or 47) in a 4-lakh rupee Jeep and 7-lakh rupee City Vtec as much as I have in a 530d or C220d or an M5. For petrolheads, the car we own is everything, but that doesn't mean we should only find pleasure in fast luxury cars. I love my 20-lakh rupee Thar as much as the BMW. In the recent past, I've truly enjoyed cars like the C3 Turbo, Curvv EV and so on. My best road-trips were in the Safari Facelift, 5-door Gurkha and Thar Roxx (admittedly, the recent fun one was in a Range Rover).

There is no such rule that the more money you'll spend on a car, the more fun you'll have with it.

• Luxury cars provide one with a lot of driving pleasure, pride of ownership & admiration of the build, interior quality etc. They indeed are a class apart. On the other hand, when you own a luxury car in India, you officially become part of the "rip off" club. Everything is expensive! Big, fast 6-cylinder sedans & SUVs require new tyres costing Rs 70,000 every 20,000 - 25,000 km. Headlights cost 50k in the aftermarket and 1-lakh at the dealer. Once your E-Class or 5-Series is out of warranty coverage, you will be spending anywhere between 1 - 2 lakhs on it every year.
• I prefer buying pre-owned luxury cars only as their depreciation falls off a cliff at the 3 year mark, and I have frequently seen "almost new" used cars for 50% of the MRP. These cars also age very well & slowly. Many of us BHPians own 8 - 10 year old German cars that still drive fantastic. Getting a 3 - 5 year old luxury car that's well maintained and with the km reading <40,000 or 50,000 km is ideal.

Here's what BHPian Axe77 had to say on the matter:

If you have to think about whether or not to purchase a luxury car very very carefully, it’s likely premature and ill advised.

I like what Ankur’s video above said (saw a few snippets of it) and also agree with most of what GTO said above.

I have bought luxury cars outright as well as on loan for different reasons. Personally, I bought my first luxury car (BMW 3GT) at age 38 or so, without a loan. I had just bought my current house back then on a loan just about a year or so prior but at that time didn’t want yet another loan for a car.

Its only in the last few years, (Meridian 2022; GLC 2024 and 1300GS 2025) that I have taken a little bit of loan for these vehicles) but that is mostly because I can get some tax benefit on the interest paid on vehicle loans and for liquidity and investment management. Given my age, I have limited these loan tenors to 3 years instead of the more common 4-5 years. I hate the idea of these 7 year loans etc for something like a car. If you genuinely require such a long tenor to be able to fund the purchase, you should likely downgrade the ticket size.

A few general pointers on luxury car ownership IMHO:

• They should only be made basis a solid financial bedrock. They are amongst the last lines of splurging. I always say, stretch a little more than you can afford if buying a home and buy a little lower than you can afford when buying a car.
• Any extraordinary expense on the vehicle (not inconceivable with these high end cars) should not upset your finances or cause you to unduly sweat.
• Early years of earning should be heavily biased towards prudent investments as they will reap you rewards via compounding in later years.
• If anything turns for the unexpected (job loss, decision to stop earning, any similar change of circumstance), you should have enough liquid investments to be able to simply cut a cheque and retire the loan or continue servicing the EMIs without it compromising your lifestyle on other essentials.
• Vehicles should not comprise more than 10% of your net worth if you are younger (say sub 40) and not more than 5% of your net worth if you’re above 40. In saying 5 or 10%, I mean the MRP of the car not the down payment you’re making.
• Even if you are an enthusiast there are enough and more ways to enjoy a great vehicle without breaking the bank. There can be great enthusiast cars that can be had at fantastic prices - a VW Polo GT TSI, a Thar, a Vento .. and so many others. Sure none of these are an M340i or a Defender or a Mini Cooper but they can provide plenty fun in their own right. The occasional experience of a German can be had via rentals either here or abroad. You don’t necessarily need to plonk permanent big money into one if you’re not ready for it yet.

Read BHPian comments for more insights and information.