Luxury and affordability don’t always go hand in hand, but today’s automotive market offers several high-end models that deliver premium quality, advanced technology, and stylish design—all within a reasonable budget. If you’re looking for a luxury car under $40,000, there are excellent options from Alfa Romeo, Audi, BMW, Mercedes-Benz, Lexus, and Tesla that provide the perfect blend of performance, comfort, and prestige.
Here are 10 of the best luxury cars you can buy new for under $40,000 in 2025.
1. Alfa Romeo Giulia
Starting Price: ~$39,400
Engine: 2.0L Turbocharged Inline-4
Horsepower: 280 hp
The Alfa Romeo Giulia brings Italian flair to the luxury sedan segment with its sharp handling, stylish design, and engaging driving dynamics. The 2.0-liter turbocharged engine provides plenty of power, while the well-appointed interior offers premium materials and a driver-focused cockpit. It’s an excellent choice for those who want a sporty yet sophisticated luxury car.
2. Audi A3
Starting Price: ~$36,800
Engine: 2.0L Turbocharged Inline-4
Horsepower: 201 hp
The Audi A3 is a small luxury sedan that punches above its weight with a high-tech interior, smooth ride quality, and standard quattro all-wheel drive. The A3’s well-designed cabin features Audi’s Virtual Cockpit, a sleek infotainment system, and a refined layout. It’s an excellent option for those looking for a compact luxury experience without sacrificing performance or style.
3. Audi Q3
Starting Price: ~$38,900
Engine: 2.0L Turbocharged Inline-4
Horsepower: 184-228 hp
For those who prefer an SUV, the Audi Q3 provides a perfect blend of practicality and luxury. It offers a well-crafted interior, high-tech features, and a smooth ride. The optional 228-horsepower engine makes it lively enough for city and highway driving, while the standard quattro all-wheel-drive system ensures stability in all weather conditions.
4. BMW 2 Series Gran Coupe
Starting Price: ~$38,400
Engine: 2.0L Turbocharged Inline-4
Horsepower: 228 hp
The BMW 2 Series Gran Coupe brings the brand’s signature sporty handling to an entry-level luxury sedan. Its sharp design, high-tech cabin, and engaging driving experience make it a compelling option in this price range. While it’s front-wheel-drive based, BMW’s xDrive all-wheel-drive system is available for extra grip and confidence.
5. BMW X1
Starting Price: ~$39,900
Engine: 2.0L Turbocharged Inline-4
Horsepower: 241 hp
BMW’s smallest SUV, the X1, delivers premium features in a compact package. It’s one of the more spacious options in its class, offering a practical and upscale interior with advanced driver assistance systems and a user-friendly infotainment setup. The turbocharged engine provides lively performance, making it a great daily driver with a touch of luxury.
6. Mercedes-Benz A-Class
Starting Price: ~$37,500
Engine: 2.0L Turbocharged Inline-4
Horsepower: 188 hp
The Mercedes-Benz A-Class sedan offers a high-tech, luxurious cabin with a sleek and modern design. Featuring the Mercedes-Benz User Experience (MBUX) infotainment system with a voice assistant, a premium interior, and an elegant ride, the A-Class feels like a more expensive vehicle. While it may be the entry-level Mercedes, it certainly doesn’t lack sophistication.
7. Mercedes-Benz GLA
Starting Price: ~$39,800
Engine: 2.0L Turbocharged Inline-4
Horsepower: 221 hp
If you’re looking for a luxury compact SUV, the Mercedes-Benz GLA provides a stylish and comfortable ride with a well-appointed interior. It’s packed with technology, including a dual-screen setup for infotainment and digital gauges. The GLA is also more spacious than its predecessor, making it a practical option for those who need extra cargo space.
8. Lexus IS 300
Starting Price: ~$40,000
Engine: 2.0L Turbocharged Inline-4
Horsepower: 241 hp
The Lexus IS 300 is a sporty luxury sedan that delivers a smooth and quiet ride, making it ideal for long highway drives. Known for its reliability and build quality, the IS 300 offers a well-crafted cabin with premium materials and advanced safety features. While the turbocharged four-cylinder engine provides respectable performance, there’s also an available V6 option for those wanting extra power.
9. Lexus NX 250
Starting Price: ~$39,800
Engine: 2.5L Inline-4
Horsepower: 203 hp
For those who prefer a small luxury SUV, the Lexus NX 250 is an excellent option. It features a refined and comfortable interior, a user-friendly infotainment system, and excellent fuel efficiency. The NX 250 also comes with Lexus’s suite of driver assistance features, making it a safe and smart choice for buyers looking for a premium compact crossover.
10. Tesla Model 3 RWD
Starting Price: ~$38,990
Engine: Single Electric Motor
Horsepower: 283 hp
The Tesla Model 3 remains one of the best electric luxury cars available under $40,000. With impressive acceleration, cutting-edge technology, and access to Tesla’s vast Supercharger network, the Model 3 is a forward-thinking alternative to traditional gas-powered luxury cars. The minimalist interior and large central touchscreen create a futuristic driving experience, and the Model 3’s range makes it a practical EV choice for daily use.
Luxury cars under $40,000 offer a fantastic balance of comfort, technology, and performance, making them accessible without compromising on quality. Whether you prefer a sporty sedan like the Alfa Romeo Giulia, a tech-forward option like the Tesla Model 3, or a practical luxury SUV like the BMW X1 or Lexus NX, there are plenty of great choices available.
