One of my closest friends comes from what I might discreetly term "old money." But apparently, before there was old money in their family, there was no money in their family. When she first told me about the family's auto-buying practices, I was surprised. You see, they drive nice cars—very nice cars. It's just that none of them are new. As for me, I come from the straight-down-the-middle class, and I've never bought a used car in my life. But I will on the day my 10-year-old (beloved) Toyota finally drops dead. Here’s why.

Who is rich?

According to Forbes, the richest people in America are the top 1% (who earn $506,000+ annually). According to our President, the richest people in America are the top 2% (who earn $250,000+ annually). Since I earn nowhere near either number, I feel totally comfortable with both assessments.

Here’s what current research says about how the top 1-2% shops for vehicles.

1. Buy pre-owned vehicles wherever possible

Rich folks favor pre-owned over new vehicles…every time.

Here are a few key reasons:

  • Pre-owned cars are cheaper
  • Pre-owned cars today come with the same certifications and warranties as new cars (if you are shopping in a reputable place).
  • Pre-owned cars circumvent the instant "off the lot" devaluation new car owners have to contend with (this can be $15,000+ depending on what you buy).

2. Ensure vehicle payments never exceed 20% of your annual income

Twenty percent of your annual income is what a car dealership will look for in determining when to finance your auto loan. But the rich are much more stringent in their requirements.

Here are two tips to live by:

  • If you must finance, 5-10% of your monthly income is your ceiling. More than that and you're buying too much car for what you earn.
  • If you can, pay cash. Paying cash removes all "extra" fees—no finance charges, no account maintenance fees, and (most importantly) no accrued interest.

3. A pre-owned luxury brand trumps a new economy brand every time

If you work in an industry (think investment banking, real estate, law) that responds well to overt "displays" of success, you may opt for a luxury brand. But here, opt for a pre-owned luxury brand. Most observers won't know to discern the model differences from one year to the next, so your secret will be safe…and so will your checkbook!

4. Just say no to six figures

When it comes to browsing before buying, $40,000 is your magic maximum. A recent (2012) TrueCar study reported on who drives what in the 10 richest zip codes in the country.

  • 8 of the 10 vehicle brands bought by folks in these zip codes cost $40,000 or less.

5. Fall in love with foreign

Hands down, the rich prefer foreign-made brands. Sixty-one percent of the richest of the rich buy economy foreign brand vehicles.

Here are the top six brands favored by rich buyers:

  • Mercedes
  • BMW (The premier vehicle in the BMW line is the Rolls-Royce!)
  • Lexus (Made by Toyota.)
  • Toyota
  • Honda
  • Acura