Posted by Lending Club :: January 12, 2009 @ 11:31 am

Even though now is an excellent time to buy a car, my wife didn’t get one wrapped in a bow on Christmas morning. Each of the adjectives in the title of this post give an indication of why buying a new luxury car as a surprise gift is such a bad idea. Looking at each of them in more detail will make this even clearer.

New

One of the first rules of personal finance when it comes to buying a car is to always buy used. Some people take this to mean buying certified pre-owned (or like new), while others go for the truly used car. Even if you are planning to pay cash and drive your car for a very long time, buying new almost never works out in your favor.

Luxury

There is nothing inherently wrong with buying a luxury car. Higher quality may lead to reduced maintenance, longer vehicle life, etc. If such factors are your motivation, that’s fine. If the status and prestige of driving a luxury vehicle are your motivation, such a mindset probably enters other aspects of your finances as well. The appearance of wealth is often one of the many hindrances to actual wealth.

Surprise

I cannot imagine spending enough to buy a car without consulting my wife first. We typically discuss any purchase that isn’t part of our yearly budget, regardless of the amount. Even if we had the money saved for a new car, spending such a large amount without her evaluation of the costs and benefits of a particular car seems to belittle her importance in financial decisions.

Gift

Even if you know the recipient’s tastes very well, you probably won’t make all of the same choices he or she would have made when choosing the car’s options and features (including color). Along with providing for his or her transportation needs, you’re also burdening the recipient with the choices you make for as long as he or she owns the car. Such action may also suggest that you do not value the recipient’s opinion or that you know what the other person should like.

If buying a new car for your spouse seems like a good idea, make the decision together and consider a used car appropriate for your lifestyle. If you fall for the advertising that a new luxury car makes the perfect surprise gift, I’ll caution you to carefully reconsider. I always wonder what people who give new luxury cars as surprise gifts do to follow that up. Topping such a gift is an accelerating path towards financial ruin and anything less will likely be seen as a letdown.

What’s the most expensive surprise gift you’ve even given or received and how did it work out for you?