Dave Ramsey Has a Warning for Those Looking To Buy a Car

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Carfax sticker on a used pre-owned vehicle. Carfax provides vehicle reports for prospective buyers that may reveal problems.

When it comes to car buying, you’ve got to take the good news when you can. According to the experts at Kelley Blue Book, the average transaction price (ATP) for new cars dropped $14 to $48,275 from March to April and it’s the second time in almost two years that average transactions dipped below the manufacturer’s suggested retail price (MSRP).

Whether these numbers represent optimistic trends or minor aberrations, new car prices are still about 27% higher than they were when the pandemic hit, prompting financial gurus like Dave Ramsey to warn customers about the pitfalls of buying new.

According to the bestselling author and radio personality, those looking to buy a car should aim their sights lower, older and cheaper.

“We’re not going to beat around the bush: The very best way to buy a car is to save up and buy a reliable, slightly used car (with cash),” claims Ramsey’s site, Ramsey Solutions. “You’re always going to be better off buying used and paying up front instead of going for the shiny new model that some overcaffeinated car salesman is trying to get you to borrow money for.”

For money experts like Ramsey and Suze Orman, there’s no rationalization for spending an enormous amount of money on something that depreciates so quickly. According to Carfax, cars lose 20% of their value in the first year of ownership and retain just 40% of their original value after five years.

“Your goal should be to buy the least expensive car. Period,” said Orman. “That should steer you to a used car rather than a new car.”

Tweeting in March, Ramsey stated, “Most millionaires don’t drive flashy cars. When people don’t waste money to LOOK wealthy, they have money to actually BECOME wealthy.”

Purchasing a nearly new model after the vehicle’s initial steep depreciation can save you thousands, which is money that can be put to better uses than a car loan or dealership payments.

“The choice between a new or used vehicle (and how you pay for it) could be the difference between riding the highway to wealth and financial independence or spinning your wheels in a rut of debt and endless payments,” Ramsey Solutions added.

When you’re looking to buy a car, Ramsey and his cohorts explicitly believe you should never spend more than half of your annual household income. In fact, Ramsey Solutions doesn’t “recommend buying a new car — ever — until your net worth is more than $1 million. If you’re a millionaire and you want to buy a new car that costs a very small percentage of your net worth, then go for it.”


 
LOL he expects Americans to save up 20+ grand cash to blow on a slightly used car? Most Americans don’t even have 1000 k in savings. FOH . Slightly used cars ain’t cheap for most people
You know you can finance used cars too. That's the biggest point he's trying to make due to the depreciation of new vehicles
 
its a tough pill to swallow but my last 2 cars were used 5 years old at the time
and this advise makes sense
No, it’s not absolute. I’d prefer to buy a new or one year old Corolla with 5 year warranty on it and finance it for 5 years. You get a good reliable car fir a low affordable monthly payment.
Leases also used to be good alternatives but I don’t know about now.
 
He said save up and pay cash for a slightly used car. This article is about not having a car note at all
He did say that's the very best way to buy a car but that's not the recommendation of the article. The article was simply stating to not buy new.
 
No, it’s not absolute. I’d prefer to buy a new or one year old Corolla with 5 year warranty on it and finance it for 5 years. You get a good reliable car fir a low affordable monthly payment.
Leases also used to be good alternatives but I don’t know about now.
Leasing is terrible right now. The days of cheap leases are gone , for BMW at least. People paying close to $2000 a month to lease a G80 M3
 
You know you can finance used cars too. That's the biggest point he's trying to make due to the depreciation of new vehicles
But the finance rates are much higher for used.... my credit union had a real low rate for new cars.... and like a 20% rate for used :dunno:

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Leasing is terrible right now. The days of cheap leases are gone , for BMW at least. People paying close to $2000 a month to lease a G80 M3
Oh yeah, fuck that. But I see that prices are dropping but rates are up. I saw the new XM being discounted by $15k. I really thought about it but decided to slow my roll on it.
 
Oh yeah, fuck that. But I see that prices are dropping but rates are up. I saw the new XM being discounted by $15k. I really thought about it but decided to slow my roll on it.
Yeah it really doesn’t matter with rates like this. They’d have to drop cars by half price for it to balance out otherwise you’re going to get raped.
 
Yeah it really doesn’t matter with rates like this. They’d have to drop cars by half price for it to balance out otherwise you’re going to get raped.
Man , the rate on my 750 was 1.9% in 2020 and when I tried to buy a new car last month the dealer was telling me 8.35% with an 880 credit score.
 
Man , the rate on my 750 was 1.9% in 2020 and when I tried to buy a new car last month the dealer was telling me 8.35% with an 880 credit score.
Yeah I got my M340 in 2020 my rate was wild low. I also bought another house that year too and got a 2.6% home loan
 
LOL he expects Americans to save up 20+ grand cash to blow on a slightly used car? Most Americans don’t even have 1000 k in savings. FOH . Slightly used cars ain’t cheap for most people
Especially when most people are trying to get rid of there problems
 
Yeah I got my M340 in 2020 my rate was wild low. I also bought another house that year too and got a 2.6% home loan
Yeah I remember. I just went ahead and bought the car in cash. When I looked at the amortization for financing it was sickening.
 
Man , the rate on my 750 was 1.9% in 2020 and when I tried to buy a new car last month the dealer was telling me 8.35% with an 880 credit score.
USAA gives us the lowest rate. I can't imagine going over 2% now. We refinanced our house during the pandemic and got a 2.4% rate. We didn't want any cash out of the deal, we just wanted that rate.
 
Man , the rate on my 750 was 1.9% in 2020 and when I tried to buy a new car last month the dealer was telling me 8.35% with an 880 credit score.
:confused::confused::confused: How is this possible?..... :dunno:

Most credit scores that lenders use in the United States range from 300 to 850. And when people talk about achieving the “highest” credit score possible, they're usually talking about the ever-elusive 850 FICO® Score. Earning a perfect 850 FICO Score isn't common, but it's certainly possible.

What is the highest credit score? (And can you get it?)

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USAA gives us the lowest rate. I can't imagine going over 2% now. We refinanced our house during the pandemic and got a 2.4% rate. We didn't want any cash out of the deal, we just wanted that rate.
Yeah car rates with usaa is now at least 5.69% lowest.
 
By the time you pay for a secondary warranty, and all type of ridiculous maintenance issues You would've already pay for a new car.

I've had new cars right off the showroom floor. And I've had used cars. Get the new car it makes more sense. Most have 3 year warranties and most don't give you any issues at least for 4 years of driving as long as you do the necessary maintenance required. Oil change, tire rotation, brakes and pads. Don't drive like a demon out of hell and you will be more than fine.

I'll be at my Lincoln MKZ since 2014 and I've just now had work to do to it.

Oh yeah, his quote about vehicles dropping 40% is not true in all cases. There are Bentleys from 2010 that still cost $200 grand. They're also infinity SUVs that's 8 years old plus that are still $50k plus. Or Darn near 10 to $15,000 less than the brand new models.
 
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By the time you pay for a secondary warranty, and all type of ridiculous maintenance issues You would've already pay for a new car.

I've had new cars right off the showroom floor. And I've had used cars. Get the new car it makes more sense. Most have 3 year warranties and most don't give you any issues at least for 4 years of driving as long as you do the necessary maintenance required. Oil change, tire rotation, brakes and pads. Don't drive like a demon out of hell and you will be more than fine.

I'll be at my Lincoln MKZ since 2014 and I've just now had work to do to it.
You can buy used cars with a few thousand miles . Used car doesn’t mean out of warranty shit box
 
By the time you pay for a secondary warranty, and all type of ridiculous maintenance issues You would've already pay for a new car.

I've had new cars right off the showroom floor. And I've had used cars. Get the new car it makes more sense. Most have 3 year warranties and most don't give you any issues at least for 4 years of driving as long as you do the necessary maintenance required. Oil change, tire rotation, brakes and pads. Don't drive like a demon out of hell and you will be more than fine.

I'll be at my Lincoln MKZ since 2014 and I've just now had work to do to it.
IMO, new cars make no sense. Hell, my car is paid off and it's STILL under warranty.
 
By the time you pay for a secondary warranty, and all type of ridiculous maintenance issues You would've already pay for a new car.

I've had new cars right off the showroom floor. And I've had used cars. Get the new car it makes more sense. Most have 3 year warranties and most don't give you any issues at least for 4 years of driving as long as you do the necessary maintenance required. Oil change, tire rotation, brakes and pads. Don't drive like a demon out of hell and you will be more than fine.

I'll be at my Lincoln MKZ since 2014 and I've just now had work to do to it.

Oh yeah, his quote about vehicles dropping 40% is not true in all cases. There are Bentleys from 2010 that still cost $200 grand. They're also infinity SUVs that's 8 years old plus that are still $50k plus. Or Darn near 10 to $15,000 less than the brand new models.

For the buyer that 2010 Bentley must have $165k in the back seat!

breakfas-cclub-donnell-rawlings.gif
 
:confused::confused::confused: How is this possible?..... :dunno:

Most credit scores that lenders use in the United States range from 300 to 850. And when people talk about achieving the “highest” credit score possible, they're usually talking about the ever-elusive 850 FICO® Score. Earning a perfect 850 FICO Score isn't common, but it's certainly possible.

What is the highest credit score? (And can you get it?)

.
My bad. It's actually 890 and it is a genuine FICO score. Yet, they tried to give me a shitty rate but the finance guy got upset when I told him I'll wire the full funds that afternoon and he can keep his 8.3%. See your PM
 
By the time you pay for a secondary warranty, and all type of ridiculous maintenance issues You would've already pay for a new car.

I've had new cars right off the showroom floor. And I've had used cars. Get the new car it makes more sense. Most have 3 year warranties and most don't give you any issues at least for 4 years of driving as long as you do the necessary maintenance required. Oil change, tire rotation, brakes and pads. Don't drive like a demon out of hell and you will be more than fine.

I'll be at my Lincoln MKZ since 2014 and I've just now had work to do to it.

Oh yeah, his quote about vehicles dropping 40% is not true in all cases. There are Bentleys from 2010 that still cost $200 grand. They're also infinity SUVs that's 8 years old plus that are still $50k plus. Or Darn near 10 to $15,000 less than the brand new models.
Ermm...No 12-year-old Bentley is going for $200k, chief. They are not special cars.

Also, the more expensive the cars are, the worse the depreciation. I just bout a 1-year-old $150k car with 9500 miles on it for less about 60% of that and they gave me a 5-year unlimited miles manufacturer warranty. That is in fact better than a new car.
 
My bad. It's actually 890 and it is a genuine FICO score. Yet, they tried to give me a shitty rate but the finance guy got upset when I told him I'll wire the full funds that afternoon and he can keep his 8.3%. See your PM
I thought that 850 was the highest possible score, like the link said... when I first learned what FICO was, I searched for the highest possible score so that I could strive for it.... no one ever said over 850... ighest that I've ever gotten to was 810... :dunno:

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Ermm...No 12-year-old Bentley is going for $200k, chief. They are not special cars.

Also, the more expensive the cars are, the worse the depreciation. I just bout a 1-year-old $150k car with 9500 miles on it for less about 60% of that and they gave me a 5-year unlimited miles manufacturer warranty. That is in fact better than a new car.
I used to work at a party rental place part time.... the two dudes that owned it used to cry about the depreciation on the BMWs and the Jaguars that they owned

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I thought that 850 was the highest possible score, like the link said... when I first learned what FICO was, I searched for the highest possible score so that I could strive for it.... no one ever said over 850... ighest that I've ever gotten to was 810... :dunno:

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Yes, all my regular scores are 850 but there are specific types of Fico scores that go up to 890 like the auto-finance specific scores. if your regular score is 810, you're probably around 840 for auto finance scores.
 
From what I've been told, only consider buying a new car if you're one of those people who keep a car until it can't drive anymore.

I know someone who bought a new car in 2010. He's still driving it today. He just does the required maintenance.
 
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