7 Reasons the Rich Drive Cheap Cars
Many luxury vehicles cost upwards of $100,000. Some luxury cars, like Bentleys, Lamborghinis or Ferraris, can cost even more than that. Given the exorbitant price tag, you wouldn’t be alone if you think that only the rich can afford to drive these cars.
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But just because rich people can afford these cars doesn’t mean they actually buy them. Many high-net-worth-individuals actually opt for more economical or understated cars, like Toyotas or Hondas.
If money’s not an issue, then why do rich people still drive inexpensive cars? Here are the biggest reasons.
Depreciation
Cars depreciate over time. The more expensive vehicles tend to depreciate even faster than other options. This makes luxury cars a poor investment for those who would rather use their money on more meaningful things.
“The problem with cars is that they are a depreciating asset. That means when you put money into your cars, you are losing money,” said Jay Zigmont, Ph.D., CFP, founder of Childfree Wealth. “Rather than putting money into fancy cars, many of my clients are investing in themselves and their amazing lives. For example, while my clients may have a simple car, they take amazing vacations.”
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Reliability
Just because a car is more expensive doesn’t mean it’s more reliable. Many luxury vehicles are built to last about the same amount of time as their nonluxury counterparts. But even this isn’t a guarantee of safety.
What matters more than status or the price tag is, more often than not, how safe the vehicle is.
“Most of the millionaires I’ve worked with drive reasonable, unassuming cars,” said Zigmont. “There are a lot of Toyotas and Acuras in rich people’s garages. Their focus is on a reliable vehicle, not a showy one.”
“Some wealthy individuals prioritize practicality and functionality over luxury,” said Loretta Kilday, senior attorney and spokesperson for Debt Consolidation Care. “They opt for reliable, well-built cars that suit their lifestyle and transportation needs rather than flashy high-end vehicles.”
Frugality
Not everyone who’s rich was born with the proverbial silver spoon. Oftentimes, the path to gaining wealth starts with a frugal lifestyle.
“Many wealthy people became wealthy because they were frugal. They lived a lifestyle that allowed them to build wealth, even if they weren’t making a lot of money. Even after someone becomes wealthy, they’ll keep some frugal habits if they make sense,” said Melanie Musson, finance expert with Clearsurance.
“It makes better financial sense to drive a reliable basic car than to pay five times the price or more for a luxury vehicle,” she continued. “Luxury vehicles don’t tend to last longer or retain value any better than an average car.”
Discretion
Another reason why rich people drive cheap or understated cars is because they offer discretion.
“Some rich people don’t drive expensive cars [because] they don’t want to be identified as wealthy everywhere they go,” said Musson. “They want to blend in with the general public.”
A $40,000 BMW X1 doesn’t stand out nearly as much as a $345,000 Lamborghini Huracan STO.
Mileage
Luxury vehicles don’t always get the best gas mileage. Take the 2024 Lamborghini Huracan STO, for instance. It gets a combined MPG of about 15. The 2021 BMW X1 gets a combined MPG of 26.
While the price of gas might not be rich people’s biggest concern, there’s still the inconvenience of having to fill up more often at the pump.
Rising Costs
Owning a car has become increasingly more expensive over the years. Not only do luxury vehicles lose value quickly, but they also have other ongoing costs to consider.
For example, expensive vehicles tend to have higher repair and maintenance costs associated with them. They may also have higher taxes or other fees.
The cost of insurance can also be quite high, since these vehicles are more expensive to repair. According to MarketWatch, the national average cost of full-coverage car insurance is $2,008 a year. Luxury vehicles typically cost between $2,200 and $3,200 a year.
Different Priorities
Even if the money’s technically there, many wealthy individuals prefer to invest it in other things.
“Some [rich people] prioritize financial prudence and long-term wealth accumulation over ostentatious displays of wealth,” said Kilday. “Instead of spending money on expensive cars, wealthy individuals who choose to drive more modest vehicles [often] focus on building their investment portfolios.”
Musson added, “Wealthy people would often rather spend the difference in money on an appreciating asset. They may invest in artwork or other collections. They could invest in their home, because homes tend to appreciate.”
Like anyone else, many rich people also prioritize their health or experiences over material possessions. If a buying a cheap vehicle means they have extra money for other, more fulfilling things, they’re more likely to go with those over an extravagant vehicle.
But of course, everyone is different. What one person might prioritize could be completely the opposite of what someone else does.
“The key is to figure out what matters to you,” said Zigmont. “If owning an expensive car is part of what makes your life amazing, do it. If not, focus on reliability and put the money into things you really care about.”
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This article originally appeared on GOBankingRates.com: 7 Reasons the Rich Drive Cheap Cars
