How To Avoid Buyer’s Remorse When Purchasing An Expensive Vehicle

When it comes to cars, buyer's remorse is the worst because there's no return policy. Once you buy your car, it steadily depreciates in value over time. If you buy a new car, the depreciation curve over the next three years is the steepest. Therefore, you had better buy a car you really love, responsibly.

Let's discuss how to avoid buyer's remorse when purchasing an expensive vehicle. I'm assuming more of you will be YOLOing it given the pandemic has died down.

You've also got decent investment gains so why not spend some on an expensive car! Many of us have realized during the pandemic that life is precarious. We might as well spend more of our money while alive!

My Own Buyer's Remorse When Buying An Expensive Vehicle

My first experience with buyer's remorse was when I had purchased a new $78,000 Mercedes G500. I was only 24 years old, but got a new job with a raise and a promotion. I had received a lucky break and decided to splurge. Further, the G500 cost $150,000 a year earlier because one dealership in Santa Fe held the distribution rights.

Within two months of purchasing the car I regretted my decision.

A year and a half later, I sold the vehicle for a ~$20,000 loss. I sold it because it couldn't fit in the garage of the condo I wanted to buy. After realizing how much better it was to own an asset that could go up in value, I decided to stop wasting money on cars.

Saving Money By Owning Cheaper Cars

I spent the next 14 years driving cars way below my means to try and make up for my blunder. I drove an old $8,000 Land Rover from 2005 – 2014 and a $230/month business lease Honda Fit from 2014-2017.

Then, in late 2016, I stepped up and bought a 2015 Range Rover Sport. It had 10,500 miles and cost me $61,000 after tax. If I had purchase the car new, it would have cost me $81,000 after tax. I wanted a safer car for our expecting son. I wanted the safest car possible.

It's been more than seven years since I purchased the Range Rover Sport and I feel zero buyer's remorse. Yes, there have been some maintenance expenses after skipping the extended warranty. But for the most part, the car has been great. Therefore, I got to thinking about how I was able to conquer buyer's remorse when purchasing an expensive vehicle.

Here are some tips that helped me eradicate all guilt of spending a lot of money on a car.

How to eliminate buyer's remorse when buying an expensive luxury vehicle
Moose II: Still Going Strong

Eliminating Buyer's Remorse When Buying An Expensive Car

To eliminate buyer's remorse when buying a car, here are my thoughts.

1) Know the streets are like a war zone.

In the past two years I've witnessed five car accidents and driven by at least a dozen more. About 70% of the time I drive somewhere, I experience or witness a close call. Examples include drivers running red lights, speeding, sideswipes, distracted cellphone driving, road rage, drunk driving, and more.

There is only so much defensive driving you can do. If there is a reckless driver on the road, they might plow into your vehicle and cause serious harm.

Although I loved my tiny Honda Fit because it could fit into 25% more parking spots, I did not like its paper thin doors and small crumple zones. Driving a luxury vehicle tends to provide more safety features for your passengers.

2) Ask yourself how much would you pay to save a life. 

Let's say you got into an accident. Your loved one died because the airbag was too old and didn't deploy. Or perhaps the crumple zone needed to be six inches larger to protect them. I'm absolutely sure you would give EVERYTHING you have to save your loved one's life.

Given you would be willing to give everything to save your loved one's life, spending extra money on a nicer car is a bargain for added safety, comfort, and performance. The best time to own the nicest car you can afford is when you have kids.

I believe the ideal length of time to own a car is about 10 years if bought new. After 10 years, you may want to buy a new or new used car with better safety features.

How to get over buyer's remorse when buying a car
The driver of this $500K Porsche GT was doing donuts in a 25 mph zone and lost control

3) Can you overcome the feeling of regret if you could have spent more?

One of life's biggest tragedies is experiencing regret. Bad things happen all the time. But if you could have done more to help prevent a bad thing or if you did all you could and a bad thing still occurred, at least you could more easily console yourself in the aftermath.

For example, on July 7, 2018, a New Jersey father and his four daughters were killed after a pickup truck crossed a highway median and struck their minivan in Delaware — leaving only the mother as the only survivor. The daughters weren't wearing their seat belts. I would not be able to live with myself if my family died and I survived.

Car accidents happen all the time

After hearing about this tragedy, besides always wearing a seat belt, I began driving in the middle or right lane when on the highway when my family is also in the car. The more family members in the car, the more careful we must be.

To me, life insurance is worth more than the amount a policy pays out. Life insurance provides me peace of mind as the main provider.

4) Spend no more than 1/10th your gross income on a car.

When you buy a vehicle equal to 1/10th your gross income or less, you tend to not feel guilt. Instead, you start feeling great about how frugal you are.

Ideally, you can earn a high enough income to afford the safest vehicle on the market. If that's not possible, it's worth violating the 1/10th rule in order to get a safer vehicle especially if you have little ones.

Buyer's remorse comes from being unable to comfortably afford the car. Instead of the 1/10th rule, you might use the net worth rule for car buying. It's a rule used for asset heavy, income light people.

5) Write off the car as a business expense.

One of the benefits of running a business and owning a 6,000 lb gross weight vehicle or more is that you can deduct the entire cost of the vehicle as a business expense. Therefore, if the cost of the SUV is $70,000 and you pay an effective 30% tax rate, your real cost is only $49,000.

If you don't want to buy the car outright and wish to avoid “depreciation recapture,” you can always just lease the vehicle. By leasing, you still can expense the rental payments under your business according to your percentage usage. At the end of the lease, you simply return the vehicle. Here are ways to get out of a car lease if your plans change.

Of course, please double check with your accountant. Eliminating buyer's remorse when buying a luxury car is possible if you attribute the purchase to a money-making endeavor.

Big car accident, car insurance going up
A random accident I witnessed as the speeding vehicle jumped the curb

6) The more you utilize your vehicle the less guilty you will feel.

During the first few months of ownership, you will likely feel a mix of excitement and a little bit of buyer's remorse. But over time, this buyer's remorse dissipates as your vehicle's utility increases.

If you have an especially great winter family vacation, your appreciation of your vehicle's stability through the snowy mountains will go up. If you were able to transport clients to a fun boondoggle and won more business as a result, you'll certainly love your vehicle even more.

The longer you own your vehicle, the more you will utilize the vehicle. Therefore, try to own your vehicle for 10 years or longer. My goal is to drive my Range Rover Sport until 2025 so long as everything is working properly. After that, I will see what else is out there.

When I had to send my car in to fix a gas sensor recently, I felt naked. I realized that I used my car every day to take my kids to the playground, get food, and play tennis. I use my car so often that it completely reduces any feelings of buyer's remorse. My car is a necessity.

7) Make sure your priorities are taken care of.

Feeling guilty for paying a lot of money on a luxury car comes from knowing you could have spent your money more productively. 

For example, if you're still renting a crappy apartment, then you're going to feel like an idiot if you spend money on even a regular priced vehicle. Your house-to-car ratio is way off, especially since the housing market has performed so well. You could easily invest in a private real estate fund to earn more money.

There's this 37-year-old lawyer I know who pays $3,500 a month for a one bedroom apartment, yet owns a $38,000 BMW Mini and a $90,000 Porsche 911 S. He's always complaining about his finances and his love life. Perhaps paying off debt would have been a wiser move.

If you've got a house paid for, your children's education all covered, and your parent's long-term care taken care of, you won't feel guilty buying a car you don't need.

House-To-Car Guide for financial freedom

8) Achieve difficult targets average people cannot achieve.

After taking care of the basics, life is one big audacious self challenge. It's much easier to kick back and relax because life is so comfortable in America and in other developed markets. But if you decide to take on some crazy goal and succeed, well then you will likely eradicate all buyer's remorse.

I know some people who decide to run 100 mile races. I know other people who decide to put in an extra 30 hours a week on their side hustle after working 55 hours a week at their day job. Then there are aggro people in their 40s who work out 5X a week to maintain a <10% body fat percentage.

If you achieve a difficult goal most people cannot attain, then you won't feel bad paying more than average for anything really.

I told myself that if I could make Buy This, Not That into a Wall Street Journal bestseller, I'd buy a new luxury car. The book, indeed, became a WSJ bestseller, but I'd rather keep my Range Rover until 2025 at least.

Related: For A Better Life, Be The 1% In Something, Anything

9) You've calculated your estate's future value.

For those of you who are steady earners and investors, it is more than likely you will die with an excess of funds. It's obviously better to die with too much than too little since nobody ever wants to go back to work for money at an advanced age.

But if it's clear that you will die with millions of dollars at the rate you're going, then there's no reason for you not to get any vehicle you can comfortably afford that is fun, safe, and comfortable.

If you are fortunate enough to be able to die with even more than the estate tax exemption amount ($12.92 million / person in 2023), then, by all means, buy your Lamborghini, even if your gross income isn't 10X more.

Paying a 40% tax rate on every dollar over the estate tax exemption is a sin. You've already paid taxes while accumulating your wealth.

How to get over buyer's remorse when buying a car
A random car accident in a quiet neighborhood at a four-way stop sign intersection

Be Able To Comfortably Afford Your Car

Make no mistake. A luxury vehicle is not a necessity. A fully equipped $40,000 after-tax Honda Pilot has the IIH's top safety rating for its class. There's no need to buy a brand new Tesla Model X for $120,000. Yes, it's supposedly safer because it doesn't have an engine, but come on.

If you got the money, worked hard all your life, and most importantly, have a family to protect, you're free to get the safest and most luxurious vehicle you can afford. If you can afford a vehicle, you will not experience buyer's remorse.

Making money is pointless if you aren't going to spend it. So enjoy your luxury vehicle, especially after you've made a fortune since the financial crisis.

The increasingly frequent stock market corrections have shown us that our money can go *POOF* in a nanosecond. You should practice taking profits on occasion to actually pay for real goods and wonderful experiences.

You will surely encounter haters who despise that you can afford a luxury vehicle. But there's nothing you can do but let them stew. You're too busy enjoying your life to pay them any attention.

Related post: Your Car Insurance Might Not Be Good Enough

Get Life Insurance

If you have debt and dependents, I highly recommend getting an affordable term life insurance policy. You can go to Policygenius and get multiple custom quotes in one place.

My wife and I bought got matching 20-year term life insurance policies during the pandemic and it relieved a tremendous amount of stress and anxiety. 

Invest In Real Estate Instead Of Buying A New Car

Real estate is my favorite asset class to build wealth. It generates income, provides shelter, is tangible, and is less volatile. In my opinion, real estate is much more desirable than stocks. In fact, investing in real estate since 2003 was my top financial move. 

To invest in private real estate, take a look at Fundrise, my favorite private real estate investing platform. Fundrise was founded in 2012 and manages over $3.3 billion with over 500,000 investors. The firm focuses on residential properties in the Sunbelt, where valuations are lower and cap rates are higher. For most investors, investing in a diversified private real estate fund makes the most sense.

Another great private real estate investing platform is Crowdstreet. Crowdstreet offers accredited investors individual deals run by sponsors that have been pre-vetted for strong track records. Many of their deals are in 18-hour cities where there is potentially greater upside. Crowdstreet is a solution where you can build your own select real estate portfolio.

Personally, I've invested $954,000 in private real estate since 2016 to diversify my exposure and earn more passive income. Both Fundrise and CrowdStreet are affiliate partners of Financial Samurai, and Financial Samurai is currently invested in Fundrise. 

For more nuanced personal finance content, join 60,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. Everything is written based off firsthand experience. 

80 thoughts on “How To Avoid Buyer’s Remorse When Purchasing An Expensive Vehicle”

  1. After I migrated to USA in 2019, and right after I got my six figure Job, I did what I always wanted. I was always dreaming having a nice car as a kid and I bought 2022 BMW X3.

    Although now after a year, I totally regret it, because I could have spent the money in so many other things that appreciates over time like stocks. The final cash price was $65000 for me that is way over 10% of gross income.

    Although I love my car but I totally regret it. I already payed $23000 of it but yet another $41000 to pay in 4 years remained on finance. Do you think I should sell it before it depreciates more in value, is it a wise choice?

    I can sell it for around $50000 if I sell it myself to consumer and buy a car around 20k at least until I have my own house and a good amount of savings. Please tell me what would you do in my situation.

    I wish I was familiar with your website and your book earlier in life.


    1. Look on the bright side, you could have invested the money in the S&P 500 in January 2022 and lost about 20% of your money due to the bear market!

      I don’t know your income or net worth or your interest rate. At this point, I’d just try and own it for 10+ years. Every year that goes by it should get less and less of your gross income as you make more and become more wealthy. So the burden won’t feel as bad.

      Thanks for buying Buy This, Not That. If you could leave a great review on Amazon, I’d appreciate it!


      1. Thank you for your reply and insight.
        I got it at the end of 2021 when the interest rates was really good. For me the interest is 2.9% and my gross is about 150k. But I am single and pretty low monthly cost so the monthly payment is not a burden.
        and about the comment on amazon, of course, it’s the least I can do.

  2. Safety is priceless to me as a parent so I decided to upgrade my car when I had kids. I loved my old hatchback, but I wanted to get a newer car with a better crumple zone, the latest air bag technology, sensors, and just overall better features. I decided to go for a Volvo XC90 and have no regrets. It’s certainly not the fanciest car out there, but it was a big upgrade for me and fit our budget.

  3. 2018 costs to drive my Mercedes GLE including lease, fuel, insurance and maintenance were about 1.5% of my gross income. I am ok with that spend for a safe, luxury SUV. I love it and and enjoy every drive, money well spent.

  4. Sam,
    The purchase of the Range Rover is well worth the money IMHO. The safety factor is the key thing for me and there is nothing wrong with using a little of your assets to protect your loved ones including yourself. The key to owning a Range Rover is having their bullet proof warranty. Something breaks they fix it.

  5. The only surprise for me is why you did not buy a new car? You clearly can afford it and as safety is a major issue for you the newer car will have better safety credentials.

    I am guessing you do not buy shoes that are two years old. The only difference between shoes and cars is the amount of money involved – the old vs new principles are identical. Both depreciate and you have no idea what the person who owned it before did with the product. For example you have a young child – I expect at some time he will have a travel sickness episode in your car. How often did that (or something even less savoury?!) happen in the first two years of your “new” car?

  6. This is an excellent and timely post, Sam! Thank you. My Honda CRV is now 18 years old, and sadly, on its last legs. I don’t make a lot of money, and live in a high COL area. I am looking for a replacement vehicle, and love how you put key points in this post. Think I will opt for a 1-2 year old used Honda Pilot (for safety for my family). Best wishes!

  7. The trouble with asking how much you’d spend to save a life is that realistically there’s no upper limit. If the $50k Range Rover has an 80% chance of saving my sons life, but a $100k Tesla has an 85% what do you do? Or what about a $200k Maybach with a 95% chance?

    I haven’t seen the stats, but I’m fairly certain the chances of an accident affecting you rely mostly on the way you drive. Freak accidents can happen like another car crossing the highway median, but I’d be willing to bet the odds of that are significantly lower than the odds of a speeder or driving texter getting into an accident.

    I quite like the idea that you’ve changed your driving style to improve safety, this is my solution too. I used to always drive just over the speed limit, but not by so much that I’d get a fine, nowadays it’s often under it because it feels safer.

    With all that said though, I am sadly a car nut! I’ve held off well for the last 13 years with my cheap Nissan, but it’s a constant battle!

  8. Shouldn’t upkeep factor into this too, not just the sticker? I had a Range Rover as well and it was great until it needed a repair (I’ll never buy another one). While foreign cars can be great/safe, be sure to research the cost of upkeep.

    1. I think if you have a warranty and you’ve spent less than 10% of your annual gross income on the car, it covers most of the cost and the guilt. Which Range Rover did you have and what year?

  9. Northwest Islander

    I bought a “new” car last summer, a late 90s Subaru with 80k miles. Purchase price was less than 1% of my gross. It was still more than I wanted to spend, but after moving to a semi car-dependent area I needed a car. Had no car for almost a decade beforehand.

    I feel pretty bulletproof in my Subaru but I will admit that power locks, heated seats, and Bluetooth would be awesome. This post and the comments make some excellent arguments for me to splurge on a 2nd vehicle.

  10. As mentioned in previous posts, I am a luxury car nut – it is my only vice (well, maybe I own a few guitars too!). But the main motivation for better cars is safety and airbags for my family, plus my aging body prefers a plush comfy ride. I would never buy a car without rear seat side airbags for my daughter, and that option is hard to come by in mainstream cars. That said, a late model used luxury car is your best value. I recently bought a 2016 Lexus LS 460L for $47,500. It only had 21,000 miles on it and still under factory warranty, serviced at Lexus dealer, etc. An “as-new” car in every sense. The sticker on that car was $103,000!! So, someone left over $50,000 on the table to drive that car for 7000 miles per year. Assuming the original owner could afford it, then more power to him or her. They enjoyed it for sure, based on their money value system. Did they have buyers remorse? Probably not! Now I get to enjoy it at a discount based on my money value system. There is no judgment and no right or wrong. Anyway, my point is this: After (and only after) you have checked all the financial boxes in life, you have to enjoy life and what life has to offer. Money lets you enjoy luxury, be more charitable and help others, and give the next generation a boost, not to mention providing healthy food and health care. So, pick just one or two things that you love and go for it. I get it about buyer’s remorse, but we overreact as the dollar amount increases – that is human nature. Consider this, when you buy a pair of $100 jeans from Banana Republic they are worth $0 when you wear them. Now THAT is a bad investment. But you need clothes, right? BTW, I love my jeans! Cars are like jeans, you need them both, but one is just more expensive than the other, but cars have residual value and a better car just might save your life adn allow you to continue to make even more money. So, your new/used Land Rover is meant to be enjoyed and driven safely, and I hope it puts a big fat smile on your face every time you get into it! If a modest car is all you can afford, then go that route – but by all means ENJOY! No regrets.

  11. Love it when you post about cars (my favorite topic)! I agree- it’s best to buy something reasonably large and made in the last few years when you have a family.

    My preferred method is to find a lease deal on a luxury vehicle where the payment (with everything including maintenance rolled in) is equal or less than 1% of what the cash purchase price would be. It’s usually possible to find something good from Audi/BMW/Mercedes that meets this criteria. If you do the math based on some reasonable assumptions, it seems that it’s hard to do much better than that over the long run even if you buy a car in cash and keep it for 10 years. My car budget is around $55k, meaning that I look for leases priced at $550 or less (typically on a car with an MSRP in the low 60s). I’ve had no regrets doing this with my past 3 cars now and enjoy finding /negotiating the deals. My current one is my best deal yet- a 2017 x3 35i that stickered for 53k that I’m leasing for $350 everything included!

    My next target is it’s successor – the X3 m40i. It’s pretty much the perfect car in my eyes (fast, safe, not too big or small, fun to drive, comfortable, high quality interior, good cargo space, great tech, good looking). Currently the lease deals aren’t very good, but I’ve got another year left. I was also somewhat intrigued by the idea of buying a CPO Tesla Model S 90D, but by many accounts, it seems that Tesla’s used (no longer “CPO”) program has atrocious customer service and poor quality now (cars delivered dented and dirty).

  12. Simple Money Man

    I agree with almost all of these. But I don’t think to buy a luxury vehicle is necessarily safer than a non-luxury brand. For example, Hyundai and Honda both claim to have excellent safety standards. So if you get a nonluxury SUV with the airbags, detectors, etc. I’m not sure if it’s less safe than a luxury brand. I, too have a luxury brand SUV, but safety was not a selling point as that could be offered by Honda, Toyota, etc.

    1. Make no mistake. A luxury vehicle is not a necessity. A fully equipped $40,000 after-tax Honda Pilot has the IIH’s top safety rating for its class. There’s no need to buy a brand new Tesla Model X for $120,000, even though it’s supposedly safer because it doesn’t have an engine.

      But if you got the money, worked hard all your life, and most importantly, have a family to protect, you’re free to get the safest and most luxurious vehicle you can afford.

      Making money is pointless if you aren’t going to spend it. So enjoy your luxury vehicle, especially after you’ve made a fortune since the financial crisis.

      The increasingly frequent stock market corrections have shown us that our money can go *POOF* in a nanosecond. You should practice taking profits on occasion to actually pay for real goods and wonderful experiences.

  13. For me the key to safety is not only purchasing a safe vehicle but limiting the amount of miles spent in that vehicle. My wife and I both live about 3 miles from work/daycare/church/grocery store/restaurants so everything we need is very close by. Roads are deadly places to spend your time so I prefer to live a close to as possible to where the rest of my life occurs in order to save money and be more safe in the process.

  14. Michael Haarstad

    Frankly put. You bought easily one of the most unreliable cars available. Honestly, you sound immensely uninformed about car economics, buyer stewardship and reliability. This is not a “hater” email….this is a “you have no idea what you’re talking about” in this field email…..tragic that everyday people will internalize even 1% of this article.

    1. You’re probably right. I think I just got lucky with my Land Rover for 10 years the last time around. But so far so good with my range. I have a nice warranty as well That came with my car.

      I did use the reliability excuse to hammer down the price, so that was good. Taking advantage of reputation is a key negotiation strategy.

      What type of suggestions do you have for me in terms of car buying and my finances? What do you recommend other people do with their money? I’m always looking to get better. Thank you.

    2. I wonder why Range Rover is having record sales if the reliability so bad as you say? I wonder if people just don’t look at numbers.

      Generally people comment like you are jealous and simply cannot afford nice things. You would rather criticize someone’s choice rather than take action to make your self better.

      Just know that it is OK to be average or below average. Most people are simply average. Except your mediocrity or get better. It’s pretty simple.

      1. It’s probably just laziness in doing research. People who stereotype rely on past data to make decisions.

        But if you’re running a business, you improve on deficiencies or you die. Everything is rational.

    3. Michael – Very good to see you are an expert in cars and economics.

      But when I look you up on LinkedIn you’re either:

      1) Business Process Analyst at Robins Kaplan LLP, and not even a lawyer. Who graduated from Univ. of Wisconsin – Milwaukee (not even Madison) in 2012

      2) Client Relationships Developer at ABI, an enterprise software company.Cal State grad in marketing in 2015.

      3) System developer at a at Federated Insurance. Computer Science grad at Minn. State.

      What gives?

      1. Jerry
        I get what you are doing but it smacks of big brother (I know all about you) Are you trying to squelch dissenting voices?? You may not agree with Michael ( I don’t) but he is entitled to voice his opinion (assuming moderator allows)

        Further, can’t any of the jobs you mention be held by “experts” at cars or economics??

        Look – there is lot’s of crap on internet but hey it’s free and you have to sit through the appetizers to get to the meat – just the way it is. I would hate to see only thoughts I agree with on forums and blogs. World would be boring and scary.

        1. There is respectful, constructive comments, and then there are comments from Michael that add no value. So obviously I wanna look up what kind of person shares no value.

          And it’s clear, a dumb guy with a low-paying job that isn’t a finance or car expert.

          But we need guys like Michael because it makes competition so easy to get ahead.

    4. Michael, A friend of mine has a 2013 range rover. It breaks all the time, its also one of the nicest vehicles to be inside of, so luxurious! Would I own one? No. Would I presume to tell people they don’t know what they are talking about in such a dickish manner? Absolutely no. This is also not a hater message, this is a “get better at communicating with people” message.

    5. What a person buys is purely subjective. When it comes to cars there are many competing priorities that only an individual can decide which is important. Some like speed (Porsche), which means less space. Some like a certain car because of image (Range Rover), but it might not be the most reliable but great off-road. Some prioritize safety, even though the car is boring to drive (Lexus). Some have a large family or a business that requires a large SUV (Chevy Suburban) but gas mileage is lousy. Who cares and who is to judge? Buy what is right for you and don’t worry about anyone else except yourself, your needs, and your own situation. Too many people trying to tell everybody else what is right and wrong. Besides, someday, when we run out of oil, we’ll all be driving tiny electric cars! But for now, I’ll take my full-size Lexus sedan and crossover any day, because I prioritize the characteristics this brand offers.

      1. Thanks to Engineers, Big Oil companies and Technological advance, world has more known oil reserves that at any time in history. Thank God for that.

        Otherwise we would all be wearing smocks designed by the idiot AOC, and riding bicycles to save the planet and right the wrongs of the western colonialism.

        I love American muscle cars. Old, old technology, unreliable and pure fun to be in.

  15. Brandon Crimmins

    Someone else mentioned it quickly. But I think the 10 percent thing is a complete waste of thought. Whether you’re thinking in terms of payments or annual income…it rarely works out to being able to afford anything other than a chevy sonic. Especially if you include car insurance into your 10 percent. Which you really should. Since without it you cannot have a loan.

    And as far as safety is concerned… (Smh) I drive a 2006 HUMMER H2. And I like it. But for me to justify owning it as being “safer”. Would be preposterous. I drive it because it has the functionality (3/4 ton 4×4) I wanted and the features I like (leather, navigation, heated seats, etc). Now I’m sure it is in fact safer than say a Prius. But only because of it’s physical size and weight. Not because of any additional safety features like extra airbags, Lane keeping assist or collision avoidance. Because it doesn’t have those things.

    But back on topic here…Now…for me to buy the vehicle I “need” for what I do. (Landscape and plowing and yes I have a plow on my HUMMER) I would like to get a 3/4 duramax pickup. Even a work truck level trim would be in the high $50,000 range if not in the low 60s. And while I do pretty well for myself. I certainly don’t make over half a million dollars a year…yet. So the 10 percent rule would have priced me out of even the 12k I spent when I bought the HUMMER.

    I think with the extremely inflated cost of vehicles in America. This rule is old and antiquated. At best…and at it’s worst. It’s causing people to have vehicles that are unreliable and unsafe because they are already damaged to begin with.

    1. Why not buy a car in cash? It is a depreciating asset. Doesn’t seem wise to take out a loan on a depreciating asset.

      Do you think you reflect the typical American?

  16. We don’t drive much so I don’t really want to spend a lot on a car. We usually average around 6,000 miles per year. Why spend when it’ll just sit in the garage?
    I’d rather spend on something that I’ll use a lot like a kitchen remodel.
    I agree with you 100% on the safety issue, though. That’s why we usually buy relatively newer cars with good safety ratings. Older cars are better value, but usually they are not as safe.

    1. That’s true. Cars are a waste of money. Nobody needs anything more than the basic, hence why so many people feel guilty about buying a car, let alone a luxury car, hence this post.

      But if I’m going to buy a safe car, I’m going to buy a safe car that I enjoy. The marginal cost isn’t that big of a difference if you can afford it.

      1. Sam, thanks for sharing this great article. I really needed something on this topic as I am about to buy a car.

        I am impressed on how you have evolved over time from a 1/10th rule to a “You will surely encounter haters who despise that you can afford a luxury vehicle. But there’s nothing you can do but let them stew. You’re too busy enjoying your life to pay them any attention.”

        In the past you would have advised avoiding buying luxury cars because you realized that people would not give a damn about you having a new 80k four wheel toy. Where does this evolution come from?

        You say that, yes, buying a safe car that you can enjoy has a small marginal cost – however – don’t you still think that 80k for a new car is a waste of money?

        I would need to be more than convinced without having additional remorse.


        1. It’s because I’m buying a car for myself and my family, not to impress other people with what I drive.

          I don’t have a job or go anywhere to impress anybody. I stopped caring about impressing someone since 2004 when I got my old Land Rover for $8,000.

          How about you?

  17. Realistically, the 1/10 rule is BS. The average price of a new car is 34k. How many people make 340k? Way less than 1%. This is a ridiculous expectation for factoring what people in the real world could/should/would spend. Get real.

    1. Perhaps the average American who has less than $5000 saved and cannot come up with $1000 emergency shouldn’t buy the medium priced car of $34,000?

      Why not buy a cheaper car or make more money if you want to buy a more expensive car? Why is this illogical?

    2. This response is indicative of why we are screwed as a people.

      “Oh my gosh, how am I to survive? – It’s so hard because companies are FORCING ME to live in expensive houses/apartments, drive expensive cars and carry around expensive phones!!!” Erik is a follower, not a leader and has been suckered in by “the man.”

      Made it to a net worth of seven figures and have NEVER purchased a new car. Likely never will. 2-3 yr old cars are awesome, fun, safe and cheap.

      Good post.

  18. Great article and I agree on exceptions to your 10% rule to buy something safer.

    I get the don’t be a cheapskate and maybe a Honda Fit or a Fiat 500 isn’t the best safety choice for a family.

    You touched on it briefly on the diminishing returns of a Honda Pilot vs a Tesla Model X, but doesn’t that basically say pay up for size vs luxury? Physics of a large SUV or minivan vs subcompact hatchback favors the larger car?

    It’s not helpful that the IIHS separates luxury and non luxury SUVs into different classes. But how should one think about a Honda Pilot or a Chrysler Pacifica vs a Mercedes GLE?

    In the new vs used game, a slightly used luxury car vs a brand new mainstream car may have the same features.

    Going from an 18k Fit to a 35k Pilot gives you a huge boost in safety, and day to day usability etc. Going from 35k to a 50k (or more) luxury SUV probably gives you a much smaller boost in safety.

    The cheapskate/stealth wealth side of me agreed on the size argument but having a hard time splurging on the luxury argument.

  19. I’ve been thinking about upgrading my Volvo XC60 for a year now. Mine is a 2011 but only has 55k miles since I don’t drive much. It’s only worth about $10K and I make $200k (husband makes more than me and has a $20k car), so I can definitely afford to upgrade (no debt, small mortgage, 40% savings rate).

    Thing is, all I really want is my same car but in a different color with a few newer features – none of which make any safety difference or frankly any real difference to my driving experience (keyless entry, backup cams, etc.). It seems silly to spend $30k plus the value of my trade in just for a slightly better version of what I’ve already got though, so I keep sitting on my hands.

    Sometimes luxury is just that – luxury. You’re not getting more safety features or any other rational value add at a certain point. Which is totally fine if you want to spend the money; I don’t get any more value out of my Jimmy Choo pumps than I would a Cole Haan version, but I pay up for them anyway. I’m just not a car person and the dollars are a lot bigger for a giant shiny thing I only sit inside for an average of 30 mins a day.

    1. The XC60 is a great SUV and the model has changed significantly for the better since you bought yours. An upgrade sounds good to me. You have not upgraded in a while a 20% of your gross income is indicated, or 10% of combined income, take your pick.

      $50,000 – $10,000 = $40,000. You’re in luck.

      Spend some extra money on the extended Warranty and full parts replacement. It’s worth it.

  20. 7 years ago I bought a “sporty” luxury coupe for almost 100% of my yearly salary. However I never experienced any regret as still to this day I love driving it. Financially was likely not the best decision but mentally and in terms of happiness it still brings me intense joy. Thankfully my income has also grown much more. Since life has grown as well I am looking into getting a 4 door luxury vehicle with plenty of HP too keep my smiling. Unlikely I will follow the 1/10 rule as car happiness is pretty high on my list. I do end up saving thousands more elsewhere.

  21. To me, the ultimate luxury is options and why I prefer big trucks and SUVs. In addition to safety (obviously depends on model), you have the option to jump curbs, go off pavement, etc, should the situation dictate such as in emergency evacuations. Also, here in SoCal, with so many reckless drivers, you are more likely to total the other guys car and can still drive home, instead of wait for a tow truck.

    1. Trucks also have a higher center of gravity that make them more likely to roll over in an accident. Also with more and more trucks/ suvs on the road the likelihood of running into another similar vehicle is higher. I also feel that bigger vehicles are harder too control/ brake and avoid obstacles.

      1. True that higher center of gravity is the risk you take, but as you mentioned, with more trucks/suvs in the road, is rather get into an accident with a truck in a truck vs in a sedan. I’ve seen too many instances where the truck bumper is through a smaller car’s window.

        With a big enough truck, you don’t need to avoid obstacles- just run over or ram through. Also keep a good distance. I see too tail gaters who really want to see eht kind of rear bumper I have. I invite them to find out.

        1. Thank you for being a safe driver. I do worry about the crazy drivers with their bumpers at my eye level!

  22. Hi Sam,

    Good post on how to spend money on car in a responsible way. Can similar thinking be applied to other luxury items?


  23. While the 10 percent rule is a good goal, I think it’s equally as important to keep the vehicle for 10 years or longer if able. Vehicle turnover is a big waste.

    1. Agree. Point number six in this post addresses this point. I’m happy to drive my car for 10 years, or eight more years from today. But, if my finances improve and there is a safer vehicle in three years time, I wouldn’t mind selling my vehicle and getting a new one based on my financial rules.

      1. My post wasn’t directed for you, but for average consumers. You could buy a vehicle every year and be fine! But what I see most people do is have a lack of insight. The price/trim level of the vehicle is the only thing considered, not the mileage and practicality. People should be evaluating if its a vehicle they will be truly be satisfied with for years to come, instead of trading it in every 3-5 years. Whether its cars, houses, or women. Turnover kills! Key example would be my brother in law. He always looks at several well equipped suvs/trucks, but ends up cheaping out and getting a stripped down base model that he’s not satisfied with. This leads to the endless cycle of finding an excuse to trade it in for another vehicle every 1-2 years. Better to buy right the first time and have self discipline.

  24. I love this article even though these don’t necessarily apply to when I bought my Mercedes. It was more than 1/10th of my gross income (though not significantly).

    One additional thing I love about having a luxury car is that any time I need service done I am able to get a loaner car, so I do not need to rearrange my life to make it happen- no waiting, no need to ask someone to bring me there and back twice, no worrying about how my husband and I are going to share one car. I know there are some dealerships for non-luxury cars that are trying to add this service now too, but it’s been a given with my purchase.

    Also, another thing someone should consider before making the purchase is if they’ll be able to afford the maintenance on the car. I had a 2-year warranty that covered almost all maintenance and service I needed during that time. Since then, I go to a regular mechanic for things like brakes, oil changes, etc. and only go to the dealership for scheduled maintenance or troubleshooting type issues.

    2 and a half years later and I have no regrets with my purchase of my 2 year used Mercedes ML 350. And with a little one on the way, I feel confident with all the safety features that my child will be safe.

    1. Congratulations on your little one! I’m very excited for you. Good point on the maintenance and warranty.

      When your little one arrives, the value of your vehicle will go way up. I guarantee you that you’ll appreciate it even more.

  25. My son just turns 14 months, so I’m into luxury minivans nowadays ;-)

    Just scored a 2017 Chrysler Pacifica under $18k last week, that should do it for my family car.

    We have a 2012 CRV with winter tires for going to mountains to ski.

    You’re right, Sam. It does feel like a frugality win when you purchase a car within the parameters above.

  26. I like the benefits you listed as well as all the financial advice to take into consideration before buying a car. I’ve never actually owned a car of my own but I recently helped my mom buy one because the engine finally died in her ancient Volvo. She searched for a month and was only looking in the low end used market due to her budget constraints. The cars she was looking at just weren’t safe imo even though she really wanted to buy one all by herself. I convinced her to let me pitch in and increased her search range. What a difference that made in availability and quality. She got a wonderful 2008 Subaru and her reaction was priceless- “It’s like a brand new car!” To her that car is a luxury hehe.

    That’s cool you might get an electric car as your next car. I see so many Teslas around the city and think they’re pretty neat. Also reminds me of the funny Tesla scenes in the last season of Silicon Valley.

  27. Christine Minasian

    Great post Sam as usual!

    Can anyone out there recommend a safe car/suv for our teenagers? We would like to lease it as they will be in college soon.

  28. I am a long time Volvo owner, only Volvos all the way back to 1984 with my favorite, a 740. I always buy my cars new.

    Right now I have a small fleet of XC 90s, from a 2008 XC 90 through a 2016 XC90 FE. All of them are great in their own way.

    You get what you pay for.

    My driving precludes electric vehicles. And, you know, the electric that used to recharge batteries is produced somewhere

    At 53%, fossil fuels are the largest source electricity generation

    Nuclear energy is next at about 20%.

    So about 73% from pollution sources.

    Do not think that buying an electric car substantially reduces “pollution.”

    1. By pollution, I’m guessing you must mean something other than green house gases? Nuclear plants produce virtually no GHGs and have been widely recognized as a necessity were the U.S. to transition to a renewable-powered grid. Perhaps you mean spent fuel storage?

      Unfortunately enough, the Yucca Mountain national storage facility never came to fruition and now spent fuel remains on site for nuclear reactors in dry cask storage.

      Nuclear reactors provide a very valuable baseload generation resource at low average costs (given their very long expected asset lives). Renewables, when paired with cost-effective grid-scale storage, may get there one day. But until we do, nuclear is the best source of GHG free baseload generation. Who knows, maybe we’ll crack the fusion nut here in the next 20 years?

      1. It seems fusion is fifty years in the future…and always has been. Yet there are finally developments on that front. TAE Tech is creating a lot of patents recently, so maybe it will happen by 2030.

      2. I had a more general definition since I consider the possibility that a nuclear power plant can release radiation into the environment to be a kind of pollution. The point is that an electric car is not pollution free.

        Things do not look good for nuclear power generation. There is one plant under construction in Georgia, and industry experts say, it’s very unlikely that absent some extraordinary change in environment or technology, that any commercial nuclear plants beyond the plant [in Georgia] will be built in our lifetimes.

        1. Young and the Invested

          I’ll agree with nuclear being a difficult sell after two costly plants were canceled in South Carolina and the Georgia plants continue ahead with exorbitant cost overruns. If another utility (not Southern) had been spearheading those plants in Georgia, they too would have been abandoned. Instead, Southern was forced to raise cash by selling its Gulf Power utility at an extraordinary premium to NextEra.

          This staved off any chance of the plant not being completed, assuming current cost estimates and project timelines hold. However, new nuclear plants won’t be coming online anytime soon after these. The thesis that fabricating standard format parts on-site would bring down costs through uniforming the production process didn’t seem to hold water.

          But perhaps this is a case of pioneers getting the arrows and settlers getting the land? Have enough lessons been learned to re-attempt this tall order in a more economic-fashion? I’m not sure. But what makes it an increasingly tall task is the continued descent of storage and renewable prices.

    2. No car substantially reduced pollution. Moving thousands of pounds across vast distances(anything over two miles) is a huge cost or is it waste? Either way, living in America currently requires a vehicle for the vast majority
      Maybe someday we will promote policies that change this. In the meantime reliability and then safety should be paramount.

  29. #2 is my main reason I bought a model 3 and pay 10% of my income yearly for 6 years without any regret. In 6 weeks with the car it saved my life twice, and #7 what if you have saved enough? thank you from my heart by giving me the key to afford my dream car without feeling any guilt of overspending.

    1. Glad you’re safe! Yeah, once you survive a bad accident.. you’re like, screw it. I’m not going to cheap out on an econo car if I can afford it.

      It’s just not worth the risk alone, especially if one has a family.

      1. Joseph Kenney

        Is that 10% of annual income per year on the vehicle or total? For instance, if I make $240,000 a year I can spend $24,000 a year on car payments? Or are you saying I can only buy a $24,000 vehicle? I am hoping it is not the latter?

  30. I tend to hold onto my vehicles a long time.

    The car before the one I currently drive I used I kept for 11 years and 235k miles. Although that car technically was a mistake (I had a severe case of lifestyle inflation and bought a brand new Mercedes (although a C class so not too overboard) a month before the big bucks came in), because I kept it so long it ended up being an overall great purchase.

    The current car I paid with cash (2015 Tesla Model S90D). Although when my net worth dipped because of it and had a twinge of guilt, it has been my favorite car I have ever owned and even to this day still brings a smile on my face when I see it and drive it. Safety was a big reason as well as the great performance. Throw in the benefit of never having to go to the gas station as it is fully charged every morning and it really has been a wonderful thing to own.

    1. I’m looking to buy an electric car for my next vehicle. By then, surely the range will have gotten better and the variety.

      Although I enjoyed my Fit, I prefer larger vehicles that sit higher up now. Hard to get into lower cars now with old knees!

      1. There are certainly a lot of established manufacturers now entering the electric arena now that Tesla has given proof of concept.

        My Tesla has active suspension so technically you could raise it to its highest setting to help with the knee issue :) Otherwise the Model X sits high and should be an easier vehicle to get in and out of.

        Battery technology will improve leaps and bounds in my opinion as will the charging systems. The huge leg up that Tesla has now is the Supercharging network which is the key for long distance driving with these vehicles. The latest entrants to the market will have their work cut out for them establishing a nationwide and then globe wide similar system of fast chargers.

        I think anyone who test drives an electric car will be hooked. The instant torque/acceleration is something to truly be experienced and never gets old. I love seeing the expression on the faces of passengers who have never been in one before when I take off from a standstill (and I don’t even have the performance version which is like going down a roller coaster).

        Well if you do ever go with Tesla let me know and I will give you my referral code. They typically throw in some bonuses for both parties (though what they are have changed over the years).

        1. The Chevy Volt was a great compromise vehicle because of its backup gas-powered generator that provided 300 miles of additional range (alleviating range anxiety). Chevy discontinued that car as of March 2019. But they have said within a relatively short period of time they will issue a new small SUV that is at least part-EV. I am going to be in the market for that vehicle for the reasons you mentioned (sitting up high; old knees)!

  31. Great points. I have an appreciation for automobiles and have been frugal driving mid-range $20 – $25K cars long term until they rack up 200K miles. Most recently I took the plunge into luxury. I found a low mileage 4.5 year old Audi A6 Prestige for $20K. It’s a beautiful car. Since I do my own maintenance I can keep the cost of ownership reasonable. There’s no way I’m paying a dealership for $400 oil changes. So far the experiment of letting someone else eat the depreciation and being the second owner has been working. And it’s regret-free — at least until something really expensive breaks on the car I suppose.

  32. Sporting a 9-year old Camry and my wife has a 10-year old C-RV. However, she’s looking to upgrade in the coming year once she begins practicing. She has her eyes on an Audi Q5 (1-2 year used, of course), Volvo XC60, or a Lexus SUV. All come with very high safety ratings, the most important element in my mind.

    I don’t know when I plan to get a luxury car, if ever. In the next 5-8 years I’d like to get an affordable Tesla and hope those aren’t considered luxury by then. That would mean Elon’s vision for targeting the wealthy and driving down market as quickly as possible has become reality. Time will tell, but I’m in no rush to buy a luxury car, personally. Perhaps I’m not at the age where that’s important enough to me. I’d rather live well within means, save, buy a suitable house, and not sweat buyer’s remorse over such a large purchase.

    1. All those cars your wife are eyeing are considered luxury cars in my opinion. Is she planning on making big bucks? 3-5 year Q5s are still $30K.

      I’m disappointed about Tesla cutting 7% of its work force. As a shareholder, it was one of my best performers in 2018.

      1. They’re definitely luxury cars. No disputing that. She finishes her dermatology residency this June. So summer 2020 is when she’s targeting the used luxury car purchase. She also has very reasonable student debt compared to most exiting residency.

        It’ll be very managable relative to our income when we buy. And if it isn’t, we’ll consider other, more affordable options. The key is flexibility.

  33. Despite my appreciation for high-end cars and even if the 1/10 car-buying rule allows it, I personally can’t justify spending $50k+ on a car. Given this, I keep buying three year old entry-level sport/luxury cars. I tell myself that it’s the same price as a new low-end car, but I’ll enjoy it much more. So far, it’s been true, so no regrets there.

    As an aside, it’s been interesting to watch your perspectives change over time, from deriving happiness from frugality to feeling good living it up!

    1. Regarding $50K+, do you make over $500,000? I really think income has a lot to do with how comfortable one feels spending money on a car.

      For my family, buying a sports car is the opposite of safety. Do you have a family? And how old are you?

    2. One of the great things about the 1/10th rule is that you’ll always be frugal if you follow it. It’s the perfect car buying rule because it is scaleable and responsible.

      I like sports cars, but I find them difficult to fit car seats and children in them.

      1. I drive a Honda Civic. Guess my income in 2018.
        When Amazon dropped below $2000 a share, I was really,really excited. I bought as many shares I could buy. At the end of Dec. I bought Netflix. Now, I am having fun watching these two stocks. Even if these stocks went down,I would be happy. I am part owner of these companies. To me that is fun.
        I’m glad your family has a safe car. Sometimes I worry you might be cheap,which is different than frugal. Ride on

        1. We can fit our 2 kids ages 5 and 7 perfectly in the back of our Porsche 911, Boosters and all :) This is the reason why we decided to get it now rather than wait. No regrets!

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