2000 Toyota Solara
I was recently thinking about the first car that I bought after graduating from college. I went to a bunch of different dealerships(Honda, Nissan, Toyota) trying to find a car that I both liked and could afford. The cars that I could get financing for I didn’t like and the ones that I did like I couldnt get financing for. I had a low credit score due to credit card debt and no large installment credit purchases on my credit report. I was finally able to get financing for a 2000 Toyota Camry Solara SE. It was a 2 door fully loaded car that cost me about $23,000. It was a very nice riding car and had no major mechanical issues. The Solara lasted for over 8 years and had over 200,000 miles.
2006 Lexus GS
In 2006, I was in a totally different situation and was looking for a new car. I had a better credit score and a lot less debt. I decided this time to get the car I wanted. So, I bought a 2006 Lexus GS300. This is an all wheel drive four door sedan which cost me about $52,000. So far it has held up well and is a nice ride. But I found myself thinking. Is a Lexus really worth that much more than a Toyota? Is a luxury version of an automobile really worth almost $30,000 more than a car made by the same company? Does a quieter ride and a few more options really justify paying a premium price?
I think that ultimately it boils downs to economic cost vs opportunity cost. It definitely makes more sense from a price standpoint to have purchased the Toyota. Fuel economy, maintenance, and cost per mile would have been cheaper. The place where I found it interesting is when I thought about it in terms of opportunity cost. If I had not purchased the car, I would have invested in a Vangaurd mutual fund. The fund I would have invested in is down $19,800 over the last two years. This made it a lot closer contest than I originally thought.
So, was it worth it? I really think that the answer depends upon the person. I would have to say that the Toyota still comes out ahead overall as the better value. But It only ended up costing me a little more to buy a car that I really wanted. I do find it ironic that the more expensive your possessions cost, the more money that people assume that you have. When in reality you actually would have more money if you didn’t buy the expensive items.
My last car was a camry; 225,000 miles. I got a 2008 accord last year and just paid it off. I’m really into cars but I won’t get ahead of myself. My rule is thus:
When I can write a check for a bmw without feeling guilt or remorse, then I know the car will be worth it. Otherwise I’ll stick to accords and camrys.
That $30k could have bought you 9 shares of Berkshire Class B stock. You’d be out the additional 30K still, but it’d be invested in an asset much more likely to appreciate than depreciate over the next 8 years.
Good points.
“I do find it ironic that the more expensive your possessions cost, the more money that people assume that you have. When in reality you actually would have more money if you didn’t buy the expensive items.”
I couldn’t have put it any better. Buffett once said “would you rather be the best lover in the world, and be thought of as the worst, or be the worst lover in the world, and be thought of as the best.” I think that statement has a lot of correlation with money.
People usually purchase luxury cars because of image.
Yes, they are more luxurious and have lots of extra ‘features’ like leather and GPS, but it usually boils down to appearances.
Don’t get me wrong, I would LOVE a Lexus, but I’d have to be making 6 figures, and have all my other financial goals met first.
@jeff
I agree.
@TStrump
Image is a big part of it.
nice. you got ranked 6th on Google for toyota vs lexus ahead of lexus.com. how much traffic is it pulling? thats amazing out of 1 mil other pages
@mark
Thanks. I didn’t even know that until you just told me.
every now and then i get a post that ranks high in google for awhile. that is what brings the best traffic and converts the best for adsense. I got just two good backlinks for my Walmart vs Target post and now I’m in the top 10 for a search of “walmart vs target”. I was getting a ton of traffic for that around christmas. i don’t know why, but that is what people search for. just wondered if lexus vs was the same.
@mark
You were right about this post. It did bring a surge in traffic. I am glad that you made me aware that it had been posted so highly on google. I would not have known where the increased traffic had come from.