Are Luxury Cars a Good Investment? Pros and Cons

If you’re considering investing in luxury cars, there are some things you need to consider before getting started. Luxury cars tend to hold their value well over time, making them good investments if you have the money and interest in collecting nice vehicles.

However, they can take up a lot of space and aren’t practical for everyday use, and they also aren’t cheap to buy or insure, even if they’re worth more in the long run than non-luxury cars.

What Makes a Car Brand Luxury

Having a luxury label attached to your car is about more than just having extra bells and whistles; in fact, many luxury cars don’t even come with added features.

To be considered a luxury vehicle, there are two things every automaker has to do: high-quality craftsmanship must be evident throughout all components of the car—including interior design, exterior paint jobs, dashboard materials, and general build quality—and they must have satisfied their customers in every previous model year.

For example, when Tesla started making its Model S electric car in 2012, it wasn’t considered by some automotive critics as a luxury right away.

8 Reasons Are Luxury Cars a Good Investment

To understand why luxury cars are such an attractive investment opportunity, you first need to answer one question: What makes a car luxurious? It can be difficult to define at times, but I consider it somewhat of an elastic term.

Most people would agree that BMWs are luxury vehicles, but what about Infinitis or Mazdas or Audis, or even Chevys? There’s no clear definition—but there is no denying that true luxury brands have certain features in common.

1. Luxury Cars Have a High Resale Value

If you decide to go ahead with buying a luxury car, take comfort in knowing that it will hold its value better than lower-end cars.

If you want your luxury vehicle to retain its value, it’s best to buy used so that you aren’t paying for all of those new car bells and whistles.

A study from TrueCar found that over time, most brands depreciate about 15% by year five when compared to what they were worth when new.

On average, it takes ten years for a luxury vehicle’s resale value to hit 50% of its original value, which is very good news if you plan on keeping your car until then.

2. Car Manufacturers Got Your Back

But do luxury cars appreciate value? The short answer is no. Not appreciably, anyway. In fact, depreciation on average can be quite high for luxury cars.

The reason you buy a car for luxury is its style and performance, not for appreciation. It would seem that owning an expensive sports car would make you feel good about yourself—but that’s like taking MDMA so you feel happy without it actually doing anything helpful.

So are luxury cars worth it or not? They can be if they work with your lifestyle—not against it! But tread carefully.

If you’re buying a Ferrari because of what they’ll say when they see you drive up in one, or just because everyone else seems to have one … then I’d have to say: Don’t do it!

3. Better Safety Features

The average vehicle has between 10 and 20 airbags today, most of which are intended to protect occupants from head injuries.

Take away your car’s airbags, however, and you drastically increase your chances of serious injury or death.

A luxury car might be more expensive than its non-luxury counterpart, but it also offers buyers better safety features—and that can be an important benefit in terms of investment.

As part of their cost-saving measures, both Ford and General Motors (NYSE: GM) have said they’ll reduce their investments in developing new safety technology for their cars.

To what extent will these decisions hurt them when competing against foreign automakers that are making an increased investment in safety systems? Time will tell.

4. A Luxury Car Can Be Used As Collateral On a Title Loan

Generally, luxury cars lose value at a faster rate than other vehicles. As such, you’ll be able to get more money back on your loan when you return your vehicle.

However, make sure that it is properly maintained—poor maintenance can result in you having your title loan revoked! Remember that if you take out a car title loan against your car, you will not be able to drive it during the duration of your loan.

In fact, most lenders will not allow the one-time payoff of title loans so plan accordingly!

Before taking out a car title loan, call around and compare interest rates; don’t choose based on convenience alone as some lenders charge higher interest rates in exchange for allowing customers to repay over time.

5. Know What to Expect

As in most other sectors, luxury cars are typically bought more for prestige than they are for financial reasons.

While certain models of cars can certainly appreciate in value over time, you can’t bank on that fact alone when making a decision about whether or not to purchase one.

For example, your Mercedes-Benz may be worth thousands more ten years from now than it is today – but only if you find a buyer who is willing to pay top dollar.

However, there’s no guarantee that such a person will come along. If you want your luxury car as an investment vehicle, purchase it because it makes you happy first. If you end up selling it one day for what you think might be a profit, great!

6. State-of-the-art Technology

High-tech cars have higher overall value than regular vehicles. That’s because technology is becoming more popular with consumers, which means that people will be willing to pay more for up-to-date models in order to feel like they’re driving something special.

Luxury cars also tend to hold their value better than standard vehicles; if you buy a mid-priced brand car, there’s a good chance it will decrease significantly in value after only 3 years on the road.

Of course, new luxury cars may cost hundreds of thousands of dollars – but you can purchase used versions for far less money and still drive something luxurious and worth its price tag.

7. Consider Certified Pre-Owned

If you’re not looking for a new car, there are other ways to get luxury. Consider purchasing Certified Pre-Owned vehicles.

They have all of the benefits of new cars at prices that are much lower than they were when they were first sold, making them great luxury cars without breaking your budget.

Additionally, if you purchase one with certain certifications (often called CPO), it will come with extra perks such as bumper-to-bumper warranties and roadside assistance services. These added features can help boost resale value later on in its life cycle, which makes it an even better investment.

8. Get to Know Your Used Car Before You Buy

Before you plunk down your hard-earned cash for a used luxury car, do your homework.

Check out J.D. Power’s latest Annual Auto Performance Awards to find a list of used cars that get high marks for reliability as well as value retention.

A good place to start is Consumer Reports; its website has thousands of reviews from owners and it also offers tools that help you narrow down potential vehicles based on performance, safety, comfort, or reliability concerns.

Which Country Makes The Best Luxury Cars

When it comes to luxury vehicles, you’ll often hear terms like German engineering, British quality, Italian design, or French luxury.

But there’s no disputing that each country has carved out its own space in the global market of high-end autos. The fact is that every major car brand is available everywhere in one form or another.

For example, Mercedes-Benz sells everything from entry-level cars through midsize sedans up to giant SUVs and pickup trucks—all under their storied nameplate.

Most of their competitors offer similar selections. (If we’re talking European brands alone, you can usually find almost any car you want.) So what makes a car brand luxury?

Are Luxury Cars More Profitable?

A luxury car, by definition, is an expensive-to-own vehicle that requires plenty of maintenance.

However, you also can make money by buying a luxury car if you know how to buy it right.

When compared with some other methods of investing — say in stocks or real estate — buying cars can be one of your best options for generating income from your spare change. But is buying luxury cars worth it?

Let’s take a look at which country makes the best luxury cars.

Typically, when you decide to buy used products versus new ones, you usually save money; not only do you save money on sales tax but used products are cheaper because they have depreciated in value since they were made.

Is a Luxury Car An Asset?

We all like nice things, but do those nice things appreciate value over time, or is it just a waste of money?

To answer that question we have to look at what is classed as an asset and if something considered luxury falls into that category.

If you have not already seen my post on cars as an investment you can read it here.

That was written in 2009 after I had owned my car for 5 years so here I will address whether purchasing a luxury car may be worth it from a more up-to-date viewpoint.

Do luxury cars appreciate value?: Yes they do! But only if you own them for long enough!

What is a Good Luxury Car to Buy

A good luxury car is one that suits your lifestyle, both in terms of price and practicality. Many luxury cars come with high price tags. However, not all are worth it.

To make sure you’re getting as much for your money as possible, research different makes and models of luxury cars on websites like Edmunds or MSN Autos before you buy.

Are there cheaper options with similar amenities? A better value car may be available if you do some digging online first; be sure to look at dealer prices too so you don’t get taken advantage of at an automobile dealership.

Conclusion

Buying luxury cars is an investment—one that could be worth your while, but only if you look at it from all angles.

The value of these cars depends on numerous factors, including market trends and historical information about price fluctuations for similar vehicles.

Weighing pros against cons will help you make an informed decision about whether buying luxury vehicles is worth your time and money.

And remember: It’s not just about where you can get more for your money; buying luxury cars means that in addition to paying for another vehicle, you’ll be shelling out for upkeep like gas, car insurance, and maintenance—things that non-luxury car owners rarely have to worry about.