The True Cost of Financing a Luxury Sports Car vs. Pursuing an Associate's Degree
When financing a luxury car like an Audi or BMW, the true cost often extends beyond just the purchase price. This article explores the financial implications of buying a new BMW 2 Series Gran Coupe for two years while simultaneously pursuing an associate’s degree at a community college. We break down the costs involved and compare them to more cost-effective alternatives.
Financing a New BMW 2 Series Gran Coupe
The BMW 2 Series Gran Coupe, which is one of the more affordable models, is a luxury car that many aspire to own. If we assume you buy the cheapest new BMW on the market, the base price is around $35,000. Considering the cost of maintenance over 10 years, it is estimated that the total maintenance cost would be approximately $14,000, translating to about $1,400 per year in upkeep. Therefore, simply to maintain the car, you'd be spending around $1,400 annually. Adding this to the cost of the car itself, let's assume you buy a 2 Series Gran Coupe from a dealership, the sticker price could be around $40,000.
Financing Details
If you finance the car over 60 months at a moderate interest rate of 6%, and assuming you put down $5,000, your monthly payment would be approximately $677. Over 24 months (2 years), this amounts to a total of $16,248 in payments.
Expected Maintenance Costs
Beyond just the monthly payments, there are additional costs associated with maintaining a luxury car. Over the 2-year period, maintenance costs are expected to be around $2,800. Combining the payments and maintenance costs, the total expenditure for the BMW over 2 years would be approximately $19,048.
College Costs
Considering the cost of pursuing an associate’s degree at a community college, let's take the average annual cost of $5,156. Over 2 years, this comes to $10,312. This pales in comparison to the $19,048 you would spend on the BMW over the same period.
Comparing to Cost-Effective Alternatives
When you calculate the overall cost, financing a new luxury car is not only more expensive but also less practical. You could spend the same amount of money on a more affordable and reliable car or even save the money to invest it in a more beneficial way, such as higher education. For example, consider purchasing a top-of-the-line Mazda or Honda or a well-equipped one to two-year-old certified pre-owned Acura or Lexus. These vehicles not only come with more features but also offer a better value for your money.
Second-Hand Luxury Cars
Another important factor to consider is that the value of a new luxury car drops significantly the moment it leaves the dealership lot. A 3-year-old BMW 2 Series with 20,000 miles can be significantly less expensive than a new one. For example, a BMW 2 Series Gran Coupe that was originally priced around $70,000 new could be purchased for around $28,000. This means the original buyer took a hit of $42,000 for a car that still retains a lot of luxury features but at a much lower price point.
Conclusion
When comparing the financial implications of purchasing a new luxury car versus pursuing an associate’s degree or investing in a more affordable and reliable car, the decision appears clear. The associates degree is the only reasonably priced part of the equation. Financing a luxury sports car such as an Audi or BMW is one of the worst investments you can make, considering the significant depreciation in value and the high monthly payments. Investing in a more practical and valuable alternative, such as higher education or a reliable car, is the smarter choice.
Key Takeaways:
Purchasing and financing a new luxury car is costly and impractical. Savings from investing in higher education can be substantial and long-lasting. Investing in more affordable vehicles can provide the same or better features as luxury cars but at a fraction of the cost.