5 Of The Best Luxury Cars Under $40,000, According To JD Power

It's no secret that car prices have skyrocketed. These days, even the most mainstream automakers sell cars that easily reach into luxury pricing territory. For example, the 2026 Hyundai Palisade in its top Calligraphy trim costs around $56,000. Myriad luxury brands and luxury-adjacent brands (like Buick) start for well under that. That might seem grim, but it also means that if you've budgeted for a new car, a luxury brand might actually be within your reach. 

The notion that a luxury car can be a legitimate value purchase may be a little weird, but there are a handful you can get for under $40,000. Industry analytics firm JD Power even has a list of them if you input the correct search filters. You likely won't get the most luxurious features, such as the customizable fragrant dispensers and biometric door locks, but what you will get is a luxury-level vehicle with more features than you'll typically see in a regular car. 

If the concept of owning a BMW, Audi, or Cadillac makes you happy, but you don't want to spend top dollar, this is the list for you. All of these vehicles have an MSRP at or below $40,000 before taxes, and they are competitive with the best luxury cars in the segment. The only downside is that they are all on the smaller side, which is to be expected. Small cars cost less. 

The Audi A3 is an above-average vehicle in every metric. Per most reviews, it's comfortable, quick, and fun to drive, with plenty of options and features to add more luxury feel. This sedan comes with AWD, making it one of the few somewhat affordable sedans with the feature. It also has decent fuel economy, boasting 28 MPG combined. Basically, the Audi A3 doesn't have any particular weaknesses in any area, aside from space since it is a smaller sedan. 

The A3 just barely squeaks onto this list with an MSRP of $40,100 for the 2026 base model. If you can find a 2025 model — which we liked quite a bit in our review — it will start at slightly less than $40,000, and you'll probably get a good deal from the dealership to take it off of their hands. The base model comes well equipped, as is the norm for luxury brands. You get leather upholstery, a 10.1-inch infotainment display, a panoramic sunroof, and three-zone climate control out of the box. Audi has additional packages and trims to add more if you wish. 

It's a pretty good value proposition overall, although Audi does a good job of making shoppers want to step up to a higher trim. For just a few thousand more, you get Sonus-powered audio system, wireless charging, sleeker 18-inch wheels, and adaptive cruise control. Even so, you can live without all of those things and get a nice car for not that much money.

The Audi Q3 is the smallest crossover SUV Audi sells. Thanks to that small stature, it drives and rides more like a car than you might expect. As with all Audis, the Q3 comes with AWD as standard equipment, alleviating the need to add it as an option. It's a hair slower than most other luxury cars, even in this price category, but it makes up for it with decent fuel economy and an easy-going manner. 

The base model of the Q3 starts at $39,800 and comes with some decent features. They include full LED headlights with automatic high beams, a panoramic sunroof, tri-zone climate control, leather upholstery, and a 10-speaker audio system. It's actually better equipped than the similarly priced Audi A3 and presents a better value overall. The only downside versus its stablemate is that it is a little slower to 60 mph, but not by so much that it's intolerable. 

Much like the A3, Audi does a really good job upselling its other trim levels. If you don't mind adding a couple grand more to the price tag, you can get auto dimming and folding mirrors, interior ambient lighting, a 15-speaker sound system, and a 360-degree camera system for parking. During a year-end sales event, you may be able to talk a dealership into dropping the MSRP a little lower to get it under $40,000 as well. 

Toyota's pricing has also been going up, with its most recent price increase coming over the summer of 2025. That makes Lexus products like the Lexus UX much more palatable since the pricing kind of blends into Toyota's higher prices. The base model of the UX is pretty well equipped and includes leather, LED headlights, an 8-inch infotainment display, and several advanced driver aids. It's a little more spartan than some luxury options, but some people (like me) enjoy a good mixture of tech and old-school sensibilities, which makes the UX a good luxury option for those kinds of people. 

Pricing for the Lexus UX starts at $38,250, and that is for the UX Hybrid model. It is the slowest luxury car on the list today, reaching 60 mph in a slow, but not sluggish 7.7 seconds. However, it makes up for in fuel economy, where it gets 44 mpg in the city and 40 mpg on the highway, making it the most fuel-efficient model on the list. Its small size makes it handle well, and most reviews say that it errs on the side of comfort, as is the norm for Lexus. 

If you can swing it, we'd try to go up a trim level to the Premium trim. It costs around $41,000, give or take a thousand dollars, but includes a lot more luxury stuff like heated and cooled seats, a power liftgate, and a larger infotainment display. During a sales event, you may be able to coax that price down do $40,000 anyway, so it's worth a shot. 

BMW is not known for its value propositions, but the BMW 2 Series is an exception. It is one of BMW's least expensive models and, consequently, one of the smallest cars that BMW sells. The coupe probably isn't the best cruiser for families, but it is quite nice if it's just you and one other person. Per reviews, the BMW 2 Series focuses more on driving dynamics than anything else, so while it'll be a slightly stiffer ride, it'll definitely be a lot more fun to drive. 

The BMW 2 Series starts at a hair over $40,000, so you may need a little bit of haggling at the dealership to get it below there. For the price, you get the 230i base trim, which includes a peppy 2.0-liter turbo-four, heated leather seats, a 14.9-inch infotainment display, and a 10-speaker audio system. Unlike Audi and Lexus, stepping up into something demonstrably better requires a $10,000 commitment, so in this case, the 230i is probably your best bet if you want the BMW, although there are standalone options if you want more features. 

Smaller two-seaters aren't common the market, and while there are some cheaper alternatives to the BMW 2 Series, it doesn't have a ton of competition overall. Most of BMW's other vehicles are much larger, but they are also a lot more expensive, with some ranging up over $100,000 or more. So, for a small, fun cruiser, you could do much worse. 

When it comes to affordable luxury, the Cadillac CT4 dips far below its competitors in terms of price, while also keeping the base equipment pretty reasonable. The base Luxury trim includes an eight-speaker audio system, wireless Android Auto and Apple CarPlay, LED headlights and taillights, and an eight-inch touchscreen. Thus, it is a little more spartan than most but includes some of the niceties that you would expect. The base trim also comes with a 237-hp 2.0-liter turbo-four that can scoot the CT4 to 60 mph in a very reasonable 5.8 seconds. 

The price starts at a very reasonable $35,600, although it can get more expensive in a hurry. Stepping up to the Premium Luxury trim pops the price over $40,000, although not by very much, while adding several additional features. That also opens you up to a variety of additional packages that include everything from a 14-speaker Bose audio system to ventilated front seats and GM's semi-automated driving system, Super Cruise. There is also a stronger turbocharged 2.7-liter four-cylinder, but that too costs additional funds to upgrade to. 

If this one is appealing to you, you may want to act fast. Cadillac is discontinuing the CT4 and CT5 in 2026. Once that happens, the world will lose of its least expensive luxury cars. Per reports, it'll get phased out in June 2026, so you have until then to find one of these in new condition. We imagine the used market will have some for years to come at least. 

For this article, we sourced JD Power's ranking of luxury cars under $40,000. The link is there in case you want to read it yourself. However, there is something you should keep in mind when you do. The prices that JD Power lists are what owners have reported paying, and not necessarily the MSRP of the car. As an example, JD Power reports that people are paying around $35,835 for the 2025 Lexus NX. The actual retail price of the 2025 model starts at around $42,000 and the 2026 model starts even higher at $46,120. We felt this wasn't in the spirit of our article's focus, so we went stuck with the five highest rated vehicles (per JD Power) that had MSRPs either right at or under $40,000. That way, if you're near a dealership that doesn't like to play ball in terms of incentives, then at least you won't' be blindsided by a vastly higher price tag. Prices can vary dramatically from place to place and sometimes even vary within the same dealership, depending on how many dealer-installed extras were added on top. 

So, while the above prices are accurate per the automakers themselves at the time of publish, actual prices in the wild can change dramatically. JD Power, Car and Driver, and the actual automakers will all list different values based on different factors, so as always, make sure to shop around and don't be afraid to haggle a bit.