How much extra does a
luxury car really cost?
Buying a car is usually one of a persons bigger purchases in life. Many things influence which vehicle you decide to purchase such as looks, comfort and obviously price. When you are at a dealership though, it is very easy to get “up-sold” into something bigger and nicer since the addition to purchase price does not seem that bad for a purchase you will have for over the next five plus years. If you go by the monthly payment, it looks like it is even less! However, purchase price is not the only thing that changes among vehicle models. So how much extra is this upgrade really going to cost you?
Vehicles have two main categories for cost: the purchase price and operating expenses. I compared the costs of purchase price and operating expenses for 4 different cars. The Nissan Sentra, Nissan Altima, Nissan Maxima and Infiniti Q50. Notice these are all from the same car maker (Infiniti is the luxury version of Nissan) to make the comparison more focused on the difference between car models and not the brand. I also chose models that offer as similar options. This is because I wanted similarly comfortable cars on the inside with the main difference being the size, look and power between models.
The Nissan Sentra: For this I chose the SR Premium model. It will get you most of the options of the higher end cars, however there are some options you simply can’t get in a Nissan Sentra that you can in a Altima or Maxima. Options like cooled seats or advanced safety options like blind-spot detection.
The purchase price for a Nissan Sentra: $29184
The Nissan Altima: A step up from the Sentra. For this model I chose the Platinum trim. It does feature the safety options, but does not include cooled seats.
The purchase price for a Nissan Altima: $38907. Quite the increase over the Sentra.
The Nissan Maxima: I chose the Platinum trim again, and this does feature cooled seats as well as all of the options of the previous models.
The purchase price for a Nissan Maxima: $50249
The Infiniti Q50: Choosing a model for Infiniti was difficult because what they offer for options between models was a little different than Nissan and seemed like it was separated in a way to up-sell customers to a higher model. I chose the Signature Edition ProAssist but even that model didn’t have the Intelligent Cruise Control that a Maxima or the Altima would have.
The purchase price for an Infiniti Q50: $54770.
Lets compare the purchase prices of the cars using the Sentra price as the base:
In a scenario where you have a $5000 downpayment for whatever car you buy and are financing the rest, the other cars become more expensive compared to the Sentra as well. A 4 year loan with a 3% interest rate will cost you $1510 when buying the Sentra and $3108 if you chose the Q50. The difference in purchase price is easy enough to figure out, now lets see the difference in operation expenses between the cars.
For Operation Expenses I looked at the cost of: Fuel, insurance, and Maintenance.
We will start with maintenance because it is short. Maintenance expenses between vehicles are surprisingly (to me at least) not very different between models. This is because the vehicles use many of the same parts (they all can use the same brake pads for example). Even for oil changes they take similar type and quantity of oil. The biggest difference here would be personal preference and the owner deciding to buy a set of sport brake pads instead of the normal or springing for high end oil. Body work does follow the trend of increasing with the price of the cars as well as major maintenance items. The engine in a Q50 is definitely more expensive than a Sentra. This type of maintenance isn’t usually being done though so I’m not going to factor it in.
Insurance costs is an area that can be easily over-looked by new car buyers. The difference in insurance prices are quite substantial, especially if you are a new driving or don’t have a great record. Using the Sentra as the base from the quotes I got, here is how insurance costs stacked up for each model:
A 10% or 17% increase from the cheaper cars to the more expensive ones doesn’t sound like much, but it can easily add up to hundreds of dollars each year. If collision auto-insurance for a Sentra would cost you $200 a month, upgrading to a Maxima would instantly cost you an extra $20 a month.
Fuel costs is also easily over-looked but can be significant if you do a decent amount of driving. I will show the combined fuel economies for each vehicle as well as the percentages using the Sentra as a base in brackets.
Sentra: 7.2L/100km (100%)
Altima: 8L/100km (111.1%)
Maxima: 9.75L/100km (135.4%)
Q50: 10.6L/100km (147.2%)
If you are spending $150 a month in gas on a Sentra, the Q50 would be using over $220 worth! But that is not even the worst part. The Sentra and Altima use regular gasoline while the Maxima and Q50 require premium. A lowball estimate would be that premium fuel is 20% more expensive than regular. This would up the $220 cost of fuel for the Q50 to $264. If you would be spending $150 a month on fuel in a Sentra, it would cost more than $110 a month for the same amount of driving in a Q50.
To make these numbers mean something, I’m going to apply them to a certain scenario to show the varying costs of each vehicle for its lifetime.
Say you have $5000 as a downpayment on a new vehicle and you will be financing the rest at 2.5% over 5 years. You drive enough that if you chose a Sentra you would be spending $120 on gas a month. You also a received an insurance quote on a Sentra for $2065 each year. What are roughly the lifetime costs of each vehicle if you kept each one for 8 years and drove it into the ground? Maintenance will be ignored because of reasons stated previously.
Sentra: $58792 (100%)
Altima: $70671 (120.2%) – with very similar operating expenses, most of the difference between the Altima and Sentra come from the purchase price and financing expenses!
Maxima: $90123 (153.3%)
Q50: $97674 (166.1%).
Of course these numbers have a lot of assumptions based around them like insurance costs and gas prices won’t change over 8 years or you don’t blow your engine and need to replace it as well as the fact you will own the vehicle for 8 years and the resale value will be negligible by that time. That being said, I think they are good enough to get an idea how the price of vehicles ramp up by more than just the purchase price and how you’ll be paying for it over the entire lifetime of the vehicle. Some upgrades are definitely worth the price, I think the Altima is the value purchase here having almost all of the interior options that the Maxima and Q50 have while still being affordable and not requiring premium fuel. Of course there are vehicles other than Nissan to purchase, but most makers have a similar line up of cars that you can do a comparison like this one with.