When it comes to cars, buyer’s remorse is the worst because there’s no return policy.
My first experience with buyer’s remorse was when I had purchased a new vehicle when I was 24 after receiving a lucky break. Within two months I regretted my decision.
A year and a half later, I sold the vehicle for a $10,000 loss 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.
After driving an old $8,000 Land Rover from 2005 – 2014 and a $230/month business lease Honda Fit from 2014-2017, I finally stepped up and bought a 1.5-year-old Range Rover Sport with 10,500 miles for $60,000 after tax. The original new price is $81,000 after tax.
It’s been two years since I purchased the Range and I have zero regrets. The car runs perfectly and is fun to drive. I also like how it looks with 22″ rims, black tinted windows, black leather, and a metallic black exterior.
If you’re afraid of experiencing buyer’s remorse when purchasing a luxury vehicle, here are some tips that helped me eradicate all guilt.
Eliminating Buyer’s Remorse When Buying A Car
1) Know the streets are a war zone. Within 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: 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 and your loved one died because the airbag was too old and didn’t deploy or the crumple zone needed to be six inches larger. 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 an extra $20,000+ above the median new car price of $34,000 is a bargain for added safety, comfort, and performance.
3) Ask if you could live with yourself if something happened to your loved ones, and you could afford paying 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.
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.
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. You just never know. The more family members in the car, the more careful we must be.
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 do not feel guilty. 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. Or maybe you can spend up if you’ve spent 10 years at your firm or started a flourishing side business. You’ve got to find a counterbalance of accomplishment for the extra money spent on a luxury vehicle.
For me, I followed the 1/10th rule, turned 40, waited 14 years since my last luxury vehicle, built a lifestyle business, and was about to become a father. Thus, I figured it was now or never to finally live it up some.
5) A business expense reduces costs. 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, and at the end of the lease, you simply return the vehicle.
Of course, please double check with your accountant.
6) 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 is 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 ($11.4M/person in 2019), 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 since you’ve already paid taxes while accumulating your wealth.
Be Able To Comfortably Afford Your Car
Make no mistake. A luxury vehicle is not a necessity. A nicely equipped $40,000 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.
Any readers drive a luxury vehicle? How did you overcome buyer’s remorse?
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