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12 Surprisingly Affordable Luxury Cars – Best Rides Under $40,000

Is your ride due for an upgrade?

Frugal car buyers assume that luxury cars have no place in their garages or driveways. In many cases, they’re right. Buying more car than you can afford is one of the easiest and most preventable ways to get into debt. More than that, it’s often futile: to get out of debt caused by an unwise car purchase, you very often have to sell the vehicle.

But luxury cars aren’t solely for the rich and famous. If you have ample personal savings, reliable income, and budgetary discipline, you may have the means to buy a new or used luxury car.

Surprisingly Affordable Luxury Cars Under $40,000

A handful of base-model luxury new cars start at under $30,000. Pre-owned luxury cars (typically coming off three-year leases) can cost as little as $15,000, though their long-term maintenance costs are likely to be higher than their brand-new counterparts. Note that after taxes and fees, your final price may be higher, though you can and should try to negotiate a better selling price at the dealership (and can save big if you opt for a gently used car).

Let’s take a closer look at some of the segment’s best deals.

1. Cadillac CT4

  • Class: Midsize sedan, coupe
  • EPA MPG: 23 city, 34 highway
  • MSRP: $33,990
  • IIHS Crash Safety Rating: Good

The Cadillac CT4 is a sporty four-door sedan that’s undeniably fun to drive. The base model has a 237 horsepower, 2.0-liter engine with automatic start/stop capabilities. Rear-wheel drive comes standard, but you can upgrade to all-wheel drive for a couple thousand more (the precise increase depends on options). StabiliTrak technology improves braking and stability in challenging road conditions, even with rear-wheel drive.

Inside the cabin, Cadillac offers a comprehensive “infotainment” system featuring a handy touchscreen, multispeaker surround sound system, wireless charging capabilities, voice recognition commands, Apple and Android operating system integrations, and a rear-view camera. CT4 also has its own wireless hotspot, plus OnStar service and a complimentary SiriusXM trial subscription.

2. Volvo S60

  • Class: Midsize sedan
  • EPA MPG: 23 city, 34 highway
  • MSRP: $37,750
  • IIHS Crash Safety Rating: Good

The Volvo S60 has long been a popular mainstay of the venerable Swedish automaker’s lineup. The base version is a relative bargain at less than $38,000. Other customized trims and packages cost nearly twice that.

The good news: you don’t need the high-end trims, which can cost as much as $60,000, to feel like you’re driving a luxury car. The base S60 has 18-inch alloy wheels, leather seats, and swanky aluminum interior touches. A 5-cylinder engine delivers 250 horsepower at 258 pound-feet of torque – more than enough for a thrilling burst of speed whenever warranted. The optional all-wheel drive package cuts fuel economy by a few miles per gallon, but it’s certainly welcome in cold climes.

Even the base version has customization options galore. One popular add-on is the Vision package, which features rear cameras, keyless ignition, HomeLink (a smart home hub integration), blind-spot information, and park-assist capabilities. The Technology package boasts adaptive cruise control, driver alert control, lane-keeping assist, active high beams, and collision warning with auto-braking capabilities.

3. Mercedes-Benz CLA250

  • Class: Compact sedan, coupe
  • EPA MPG: 25 city, 35 highway
  • MSRP: $37,850
  • IIHS Crash Safety Rating: Superior (front crash prevention only)

For a Mercedes-Benz, the CLA250 is surprisingly down-to-earth. It’s a sleek, stylish coupe-sedan mashup that delivers 208 horsepower from an efficient 4-cylinder engine. With a 0-to-60 acceleration time just shy of seven seconds, it won’t win any awards on the racetrack, but it’s fun to drive around town.

Unlike old-school Mercedes coupes, the CLA comes standard with front-wheel drive and an independent suspension that provides a supple, adaptive ride. Performance car enthusiasts go gaga over the AMG body, an homage to Mercedes’s precision (and usually very expensive) AMG line. CLA safety features include adaptive braking, rear-view camera, eight airbags, attention assist (a driver alert system), active brake assist, rain-sensing windshield wipers, blind-spot assist, and more. And the infotainment system is pretty solid too.

close-up of mercedes benz cla250 affordable luxury car

4. BMW 230i

  • Class: Coupe, convertible
  • EPA MPG: 25 city, 32 highway
  • MSRP: $35,900
  • IIHS Crash Safety Rating: Good

The BMW 230i is BMW’s answer to the CLA250. A stunning little coupe that’s a bit smaller than the famous BMW 3 series and also available as a convertible, 230i boasts a 4-cylinder, 2.0-liter engine that achieves 248 horsepower and 258 pound-feet of torque without sacrificing fuel efficiency. For gearheads, the ultra-smooth 8-speed automatic transmission includes a manual shift mode, though it’s worth noting that manual mode saps 3 MPG from the combined fuel economy rating.

230i’s selling points are fun and performance, but safety and technology features abound too. A Dynamic Stability Control (DSC) package includes a slew of safety enhancements, such as brake drying, traction control, and brake fade assist. A seven-speaker sound system and HD radio combine to deliver crystal-clear, lifelike audio, while the iDrive infotainment system boasts eight pre-settings.

5. Jaguar XE

  • Class: Compact sedan
  • EPA MPG: 25 city, 34 highway
  • MSRP: $39,900
  • IIHS Crash Safety Rating: Poor to good

The Jaguar XE is one of the more exciting (and reliable) models to come out of its maker’s workshop in some time. A 247 horsepower engine delivers the optimal mix of efficiency, pep, and power, and the best-in-class warranty is worth noting upfront: proof that the automaker has finally put long-running questions about vehicle longevity behind it.

Though Jaguar XE’s MSRP is higher than some of the other cars on this list, its miserly fuel economy is a potential selling point for frugal drivers who plan to spend lots of time behind the wheel. Assuming average lifetime fuel economy of 28 MPG (the city/highway median) and an average lifetime fuel price of $2.50 per gallon, you’d spend just under $7,000 on gas to drive 100,000 miles in this car.

6. Audi A4

  • Class: Compact sedan
  • EPA MPG: 25 city, 34 highway
  • MSRP: $39,100
  • IIHS Crash Safety Rating: Good

The Audi A4 is among the most recognizable, longest-running luxury car models on the American market. The latest version boasts a super-efficient yet powerful engine that puts out 201 horsepower with just 4 cylinders. Choose from the standard front-wheel drive or available Quattro four-wheel drive – a must in cold, snowy climates. For gearheads, Audi pushes the ultra-smooth manual transmission option, which is a rarity these days in the luxury sedan department.

A4’s technology and safety features more than stand up to the competition. A generous “smart driving” package provides a slew of automated and safety-enhancing driving features for claustrophobic urban conditions and open-road driving alike. Electronic Stability Control (ESC), an anticipatory braking system, and a vehicle immobilizer further boost safety and security. Inside, leather seats and three-zone climate control provide unparalleled comfort, while an HD radio and state-of-the-art stereo system support theater-quality sound.

Audi A4 Model

7. Lexus UX 250h Hybrid

  • Class: Compact SUV, crossover (hybrid)
  • EPA MPG: 41 city, 38 highway
  • MSRP: $35,100
  • IIHS Crash Safety Rating: Good

The Lexus UX 250h Hybrid is the only hybrid vehicle on this list. Not coincidentally, it has the best city mileage by a fair margin – though, notably, not the best highway mileage. That honor goes to Jaguar XE.

Still, due to the excellent city fuel economy rating, UX 250h is the best luxury car choice for eco-conscious buyers: at $2.50 per gallon and 39 median MPG, your first 100,000 miles will produce a fuel bill of $6,410. Combined with its relatively low price tag, this makes UX 250h a great choice for those concerned about long-term car ownership costs.

What’s inside? UX 250h boasts an excellent navigation system and comes standard with a powerful infotainment system that lets you order roadside assistance, receive real-time maintenance alerts and recommendations, and plan your next road trip without lifting a finger. Farther back, a “customizable” cargo area offers more storage space than any other vehicle on this list, save BMW X1.

Oh, and if you’re not willing to sacrifice performance for fuel economy, you don’t have to. Upgrade to the F Sport trim, which costs less than $2,000 more than the base version and boasts a slew of driver-friendly features.

8. Acura TLX

  • Class: Midsize sedan
  • EPA MPG: 22 city, 31 highway
  • MSRP: $37,500
  • IIHS Crash Safety Rating: Average to good

Acura bills its TLX as a “performance luxury sedan.” That sounds about right. The standard engine is a 272 horsepower 4-cylinder that provides all the power you’ll need for a vehicle this light. Plus, Acura is taking the game directly to Volvo and Audi with a state-of-the-art all-wheel drive option that stands toe to toe with comparable options from V60, A3, and A4.

TLX has plenty of customization options that can push the base price well above the $37,500 MSRP. If you’re into the whole driving experience thing, opt for paddle shifters; they recreate the manual transmission experience without the inconvenience of a clutch.

9. Acura ILX

  • Class: Compact sedan
  • EPA MPG: 24 city, 34 highway
  • MSRP: $25,950
  • IIHS Crash Safety Rating: Good

The Acura ILX is a little smaller than TLX, it has fewer frills, and it’s not quite as peppy. But this entry-level vehicle stands up to scrutiny – and, with a starting price under $26,000, it’s one of the best new luxury car deals on the market today.

Acura makes a big deal of ILX’s pedigree. It apparently incorporates technology from the legendary NSX supercar, a perennial if low-profile favorite of serious automotive enthusiasts. The 2.4 liter, 4-cylinder engine summons up 201 horsepower and averages approximately 30 MPG in combined city/highway driving.

An 8-speed dual-clutch transmission – the first of its kind, according to Acura – guarantees smooth, effortless gear changes. And a state-of-the-art noise canceling system turns the entire cabin into a giant noise canceling headphone – great for drivers who don’t want wind and engine noise to interfere with their musical preferences or hands-free phone conversations.

For a relatively basic luxury car, ILX has some innovative safety and technology features. Key points include a lane-keeping assist system, adaptive cruise control, anticipatory braking (collision mitigation), and a blind-spot information system that provides real-time alerts on congested roadways.

10. Audi A3

  • Class: Compact sedan
  • EPA MPG: 27 city, 36 highway
  • MSRP: $33,300
  • IIHS Crash Safety Rating: Good

Formerly a sporty hatchback, the redesigned Audi A3 is a compact, still-sporty sedan with lots of pep and plenty of high-tech bells and whistles. In short, it’s a slightly smaller, slightly sleeker version of the A4, complete with a fuel-sipping, 181 horsepower powertrain.

Like its larger sibling, the A3 features a slew of driver safety features, Electronic Stability Control, anti-lock brakes, an electromechanical parking brake, and a high-tech child restraint system. It doesn’t have a vehicle immobilizer, though the anti-theft alarm may well be all the protection you need against would-be thieves. The xenon headlights, LED taillights, and single-frame grille combine for an arresting profile, day or night.

Inside, the A3’s creature comforts and infotainment system resemble the A4’s, down to the leather seating and HD radio. The rear-view camera is a must in tight spaces, and the rain-sensing wipers are key for hands-off (not literally) drivers.

11. BMW X1

  • Class: Compact SUV
  • EPA MPG: 24 city, 33 highway
  • MSRP: $35,400
  • IIHS Crash Safety Rating: Good

The BMW X1 is technically a compact SUV, but BMW brands it a “sports activity vehicle.” That’s because its surfeit of cargo space, lively seating configurations, and sure handling make it intensely practical – but its car-like suspension is too delicate to do any serious off-roading, despite what the TV and web spots might have you believe.

For most families, that’s totally fine. X1 is one of the more fuel-efficient SUVs on the road today, thanks to an ultra-economical 4-cylinder engine that somehow manages to produce 228 horsepower. An 8-speed automatic transmission comes standard, but if responsiveness is a priority, you can toggle to a manual shifting configuration that delivers plenty of thrills. A novel heads-up display illuminates the driver’s side windshield with important notifications and status updates, keeping your eyes where they belong at all times.

X1 offers four unique add-on packages, each of which adds significantly to the cost of the base model. If you do plan on rugged driving, consider the M Sport package, which includes a more rugged suspension and run-flat tires. The Cold Weather package is clutch in chilly regions, though be warned that it doesn’t include all-wheel drive – a potential deal-breaker for safety-minded buyers.

Bmw X1 Model

13. Infiniti Q50

  • Class: Midsize sedan
  • EPA MPG: 20 city, 29 highway
  • MSRP: $36,600
  • IIHS Crash Safety Rating: Good

The Infiniti Q50 is a sleek midsize sedan that’s been substantially redesigned. The plain vanilla version features a 300 horsepower 4-cylinder engine with a front-wheel drivetrain, 17-inch alloy wheels, dual-zone climate control, rain-sensing wipers, anti-lock brakes, the InTuition infotainment system, rearview monitor (camera), Bluetooth functionality, and SiriusXM radio, among many other inclusions.

But that’s just the start. One of Q50’s top selling points is the model’s impressive customization potential, with optional add-ons that include a top-end powertrain that puts out nearly 400 horses. Depending on your preferences, higher-end trims with added bells and whistles can dramatically increase the sticker price and sap fuel economy. On the bright side, it costs just $2,000 above MSRP to add all-wheel drive.

Final Word

Full disclosure: I’m an intensely pragmatic driver. The highlight of my driving career so far was the day I parked a former coworker’s late-model Ford Mustang, spending all of 90 seconds behind the wheel.

Though I’m more likely to invest in an economy car popular with college students than a luxury coupe, I won’t deny that I’m a fan of creature comforts or precision engineering. If owning or leasing a luxurious or high-performance passenger vehicle is important to you, and your budget is generous enough to allow you to do so without sacrifice, I say go for it.

Do you drive a luxury new or used car? Any other models that you’d recommend?

Brian Martucci
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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