Ah, good ol' Dave Ramsey! You can always count on the financial pundit to turn down his nose at any kind of luxury purchase. Cars are certainly no exception -- but by Ramsey's own advice, owning any kind of new car is something that only the already wealthy should consider.
Are you already wealthy? Do you have $1 million sitting in the bank? Then, and only then, says Ramsey, you can hit that new car lot.
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A new car is the largest purchase most of us make that actually goes down in value and it goes down in value "like a rock." That's where Chevy got the line!
— Dave Ramsey (@DaveRamsey) August 7, 2023
Let's put the numbers in perspective. If you buy a brand-new $28,000 car, it's going to be worth $8,400 in four years.…
"A new car is the largest purchase most of us make that actually goes down in value and it goes down in value 'like a rock,'" he writes on August 7. His post then goes immediately to numbers.
"If you buy a brand-new $28,000 car, it's going to be worth $8,400 in four years," he says. He's not wrong -- it's rough out there. "That means you're losing $408 every month in depreciation."
"If you think you can afford that hit, then try this: once a week on your drive to work, roll down the window and throw a hundred-dollar bill out. Can you afford that? I don't think so."
"There is no such thing as a good deal on a new car," Ramsey says. "The instant you drive it off the lot, you are immediately losing money, and you can't drive that car fast enough to catch up."
So when is it okay to buy a car brand-new? "When you have a million dollars in the bank and can actually afford the financial hit of throwing tens of thousands of dollars away just for fun."
The final takeaway? "Until then, do what most millionaires do: buy slightly used and pay with cash."
