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Saving for a luxury car

Saving money for a luxury car is not the same as saving for a holiday or a new designer jacket. That’s because, for most of us, buying a luxury car will be the most expensive purchase we’ll ever make after a home.

Buying a new vehicle is an exciting time, and it’s not hard to get carried away imagining yourself sitting behind the wheel of a new sports car. That’s why, while most of these tips may seem obvious, it’s important to make sure you’re getting the most out of your savings.

What you want vs. what you can afford

The first thing you need to do is determine how much you can spend, and how much you should spend. Unlike a house, a car is not an asset that will keep its value. In fact, as soon as you drive it out of the dealer’s lot, its value begins to depreciate. This is an important point to remember when deciding what car you should buy. It’s easy to project emotional value onto material items, and for many of us a car is more than just a way to get from A to B ”“that’s where the danger of reckless spending comes in.


Before you start your search, it’s important to secure financing. This will give you greater bargaining power and enable you to know exactly what you can and can’t afford. It goes without saying that it’s always better to pay for the car outright, but sometimes this is not an option.

Buying a luxury car using finance from the dealer is almost always more expensive in the long run. Instead, consider finding the best deal from a bank, credit union or building society. This often requires a reasonable amount of research, but don’t let the extra work dissuade you. Start by searching online for a low interest loan. Find out what the monthly repayments will be and keep precise notes for your budgeting plans later.

Shop around

Now for the fun part: finding your new ride. Start by finding out the market value of any cars you may be considering. Visit dealerships, go for test rides, email/call dealers and scour the internet.

It’s a good idea to keep your options open. When it comes to luxury vehicles, you may have your heart firmly set on one model, or even colour, but you may end up backing yourself into a financially irresponsible corner. Once you choose the one, don’t be afraid to negotiate. If bargaining face to face isn’t your strong suit, try negotiating on the phone or via email.

Whatever you decide on, remember to include the cost of stamp duty, insurance, green slip and rego transfer. Typically, this will add at least $3000 to your car.

If you’re looking to buy a second-hand luxury vehicle, be sure to have the name of a reputable vehicle inspector handy. They’ll check the car over and make sure you aren’t throwing away your hard-earned cash on a lemon.

Following a budget

If you aren’t the best saver, consider setting up a dedicated savings account. By creating an online savings account that offers a high interest rate, and setting up automated transfers into that account every payday, you will be able to see your savings account grow without having the temptation of spending it in your everyday account.

Once you purchase a new car, it is now a major personal asset. By taking care of it, you will be able to sell it for as much as possible when the time comes to upgrade.