10 Best Luxury Cars Under $40,000

Last year, this list was capped at $35,000, but the pressure of inflation is undeniable. The market’s prices reflect that economic reality in easy-to-measure dollars and cents, so it’s time to raise the cutoff for these affordable luxury cars. Accordingly, we’ve raised the figure to $40,00. The prices below do not include delivery fees, tax, title, licensing, or other costs. You can also check Kelley Blue Book’s Fair Purchase Price to save even more money or find a more expensive car that fits a $40,000 budget.

Here are 10 of the best luxury cars you’ll find for less than $40,000.

The 2024 Cadillac XT4 competes with the Audi A3, BMW X1, and similar subcompact SUVs, but its cabin is somewhat roomier, and it comes with lots of standard equipment. Only the base XT4 Luxury trim fits under our $40,000 price cap, but it brings with it wireless smartphone integration, a 235-horsepower 2.0-liter turbocharged engine paired with a 9-speed automatic transmission, and either front-wheel drive (FWD) or all-wheel drive (AWD). In FWD form, the XT4 manages 30 mpg on the highway; opting for AWD sees that figure fall just 1 mpg to 29 mpg. See 2024 Cadillac XT4 models for sale near you

The 2024 Acura Integra marks the second year of the return of a legendary nameplate, as well as the unlikely option of a 6-speed manual transmission in a new luxury sport sedan. Fun to drive even in the base version with its 200-hp 1.5-liter turbocharged 4-cylinder, the Integra also gained the Type S variant for the 2024 model year, the model that offers the manual transmission mentioned above. Unfortunately, the 320-hp Type S starts at $50,800, putting it well out of our budget. That’s alright — there’s still the A-Spec, which gets sport-themed styling tweaks inside and out, upgraded 18-inch alloy wheels, and the lively, sport-tuned setup of the standard Integra. Add the Technology package, and you’ll get a larger center display, 16-speaker ELS audio, wireless smartphone integration, and an adaptive suspension — all for just $36,500. See 2024 Acura Integra models for sale near you

Just edging in under the wire, the 2023 Mercedes-Benz GLB-Class is a step larger than the GLA-Class, but it’s powered by the same 221-hp, 2.0-liter turbocharged 4-cylinder found in its smaller sibling, at least in GLB 250 form. That’s the only variant that fits in under our price cap. All-wheel drive is available on the GLB 250, but it’s $2,000 extra. If you opt for the 4Matic AWD system, you’ll get an off-road mode that gives the GLB nearly eight inches of ground clearance. Although it’s easy to option the GLB well beyond our $40,000 limit, even at the baseline, it’s a nimble, quiet, comfortable vehicle that communicates the core of the Mercedes-Benz brand. See 2023 Mercedes-Benz GLB-Class models for sale near you

As the most affordable entry point to the BMW brand, the 2024 BMW 2 Series is not only a standard bearer but also a potential recruitment tool. If you’ve always wanted a BMW but have been too frugal, here are a couple of options that won’t break the bank. The 228i Gran Coupe 4-door sedan body style is the less expensive option. It’s powered by a 228-hp version of the brand’s 2.0-liter 4-cylinder, with standard FWD and available AWD.

If you don’t need the rear doors, however, the 230i Coupe spices up the design and the performance. It swaps in a 255-hp version of the 4-cylinder engine and drives the rear wheels by default, though AWD is also available in the coupe. Opting for AWD in either model will put the base price just over our $40,000 cutoff, but it’s well worth it if you need the extra traction. See 2024 BMW 2 Series models for sale near you

A hybrid by default, the 2024 Lexus UX can’t help but be efficient, getting up to 42 mpg combined on FWD models. The hybrid powertrain shared by all UX variants is a 181-hp system based on a 2.0-liter 4-cylinder and electric motor assist. The UX can also be fitted with AWD for an extra $1,400 on any trim. Speaking of trims, the Premium and F Sport Design trims start at about $38,000. That means there are options above the base model that still fit within our $40,000 budget. The Premium trim adds heated and ventilated seating, a power rear door with kick sensor, and unique appearance elements. However, the F Sport Design trim gets a complete F Sport exterior styling treatment, a black contrast roof, and F Sport 18-inch alloy wheels. See 2024 Lexus UX models for sale near you

The 2023 Mercedes-Benz CLA-Class consists of the CLA 4-door coupe in standard CLA 250 guise and two AMG flavors. The AMG models are beyond our scope here, and the CLA 250 with AWD is just barely outside our budget. We’ll constrain our attention to the base model. Equipped with FWD and a 221-hp 2.0-liter turbocharged 4-cylinder engine found in several other Mercedes-Benz products, the CLA’s svelte form feels quick behind the wheel, if not quite fast, with a comfortable ride and nimble handling. Advanced driver assists are on the options menu, but the standard audio and safety systems are also very good, with blind spot and crosswind assist. There is LED lighting and daytime running lamps on all models. A 7-inch center display and 7-inch instrument cluster screen are standard, with MBUX infotainment software and voice control. See 2023 Mercedes-Benz CLA models for sale near you

The 300-plus-hp AMG versions of the 2023 Mercedes-Benz GLA-Class are undeniably fun to drive. But the standard GLA 250 is no slouch, with 221 hp and claimed 6.6-second 0-60 mph times when fitted with the optional 4Matic AWD, a $2,000 extra. Even the FWD base model scampers to 60 mph in just 6.8 seconds, a figure that would have been sports car territory not so long ago. If you’re an audiophile, you may want to choose the base model just to leave room in the budget for the Burmester 12-speaker/590-watt surround sound system, which is available on all variants. Another key option to consider is the driver assistance package, with adaptive cruise control, active lane-change assist, and more. See 2023 Mercedes-Benz GLA-Class models for sale near you 

The SUV foil to the A3, the 2024 Audi Q3 sits at the entry point to Audi’s luxury SUV range, offering standard AWD, standard adaptive cruise control, a quality compact SUV cabin, and comfortable ride quality. A remarkable value in the luxury SUV space, three-quarters of the Q3 range slides under our $40,000 price limit, including the 40 TFSI Premium, the 40 TFSI Premium Plus, and the 45 TFSI Premium. The standard engine included in the two 40 TFSI models is a 184-hp 2.0-liter turbocharged 4-cylinder. The 45 TFSI gets 228 hp out of an upgraded version of the same engine. Opting for the Premium Plus trim adds a memory driver’s seat, wireless device charging, an LED interior lighting package, an overhead-view camera, and a hands-free power tailgate. See 2024 Audi Q3 models for sale near you

The base 2024 Audi A3, the 40 TFSI Premium trim, comes with an impressive array of equipment and features. It has wireless smartphone integration, a panoramic sunroof, three-zone climate control, and a 201-hp 2.0-liter turbocharged 4-cylinder paired with a 7-speed dual-clutch automatic transmission. All of that has a mere $35,400 price of entry, leaving room to upgrade to the Premium Plus and just sneak in under the $40,000 cap. The 40 TFSI Premium Plus trim adds wireless device charging, adaptive cruise control, Park Assist, and a memory driver’s seat. All 2024 A3 models are IIHS Top Safety Pick+ designees and come with standard forward collision warning and automatic emergency braking, among other driver-assist features. Front-wheel drive is the default for the A3, but Quattro AWD is available with either trim for a $2,000 premium. See 2024 Audi A3 models for sale near you

One of the most spacious and high-performance vehicles in the subcompact luxury SUV segment, the 2023 BMW X1 is not just a good SUV; it’s a Kelley Blue Book Best Buy Award Winner for the class. Excellent standard and optional features, a practical cabin, and a strong 241-hp 2.0-liter turbocharged 4-cylinder engine help it stand out from a competitive class. There’s just one engine option, and all X1s come with AWD. While there are a wide range of options and packages you can add to the X1, its base equipment includes a 10.7-inch center display, a 10.25-inch driver display, dual-zone automatic climate control, and driver assistance features like lane-departure warning, parking sensors, automatic high beams, and more. See 2023 BMW X1 models for sale near you