What does Dave Ramsey say about buying a new car?


Samantha Edley   |   Member since 2010  |  10+ Answers Submitted  |  ✔ Verified

As a general rule of thumb, the total value of your vehicles (anything with a motor in it) should never be more than half of your annual household income. Dave doesn't recommend buying a new car —ever—until your net worth is more than $1 million.

Dave explains a car shouldn't be worth more than half of Bob's annual income. ANSWER: The total value of all your vehicles—things with a motor in them—should not be more than half of your annual income. If you make $50, 000 a year, you shouldn't be driving a $40, 000 car.

Also Know, is it a bad idea to buy a brand new car? But even with low-rate auto financing on a new purchase, a new car will be more expensive than an older version of the same car. Not only because of the higher sale price — you'll also pay more in other areas. Brand new cars can have higher insurance premiums than used cars.

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Joyce Shields   |   Member since 2006  |  10+ Answers Submitted  |  ✔ Verified

Subsequently, question is, at what point does it make sense to buy a new car?

Because of depreciation, generally it makes more sense to buy used and here's why: On average, a new car loses between 20 and 30 percent of its value the moment it rolls off the dealer's lot. Some cars can depreciate up to 50 percent in the first three years. You don't have to take our word for it.


Owen Martin   |   Member since 2008  |  10+ Answers Submitted  |  ✔ Verified

What is better buying new or used car?

Peace of mind: A new car will likely be more reliable than a used one, even though pre-owned cars are much more dependable than in the past. If a new car breaks down, you can have it fixed for free under the included factory warranty, at least for the first 36, 000 miles or three years that most carmakers offer.


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Related Answered Questions

Below is a list of answers to questions that have a similarity, or relationship to, the answers on "What does Dave Ramsey say about buying a new car?". This list is displayed so that you can easily and quickly access the available answers, without having to search first.

Paige Phillips   |   Member since 2011  |  ✔ Verified

What car does not depreciate?

Jeep Wrangler


Allison Dixon   |   Member since 2010  |  ✔ Verified

What is the best month to buy a car?

So what is the best time of year to buy a car ? For those of you who don't think in financial quarters, this basically means:

  • March 31st (last day of Q1)
  • June 30th (last day of Q2)
  • September 30th (last day of Q3)
  • And of course, December 31st (last day of the year, and Q4)

  • Vanessa Stubbs   |   Member since 2019  |  ✔ Verified

    Are newer cars cheaper to insure?

    Newer vehicles can sometimes receive a new car discount depending on your car insurance carrier. The fancier your vehicle typically the more expensive it is to insure . The base model four door is often the cheapest way to go not only when purchasing the vehicle but also when you go to purchase insurance .


    Marissa Spencer   |   Member since 2007  |  ✔ Verified

    What is a reasonable amount of money to spend on a car?

    According to the 36% rule, it isn't wise to spend more than 36% of your income on loan payments, including car payments. Another rule of thumb says that drivers should spend no more than 15% of their monthly take-home pay on car expenses.


    Aleksandra Ogilvy   |   Member since 2017  |  ✔ Verified

    How much do car prices drop when new models come out?

    Plus, they charge a $599.99 dealer fee (or something similar) on top of that. Even at invoice price , the dealership might have anywhere between $2, 000 and $4, 000 dollars of profit to work with on a new vehicle. So imagine their margin at MSRP.


    Cassidy Gibbons   |   Member since 2015  |  ✔ Verified

    How much do you have to make to afford a 50k car?

    That's likely somewhere between 8 and 15 percent of your gross pay, which is your income calculated before taxes. So, what does this translate to? If you're earning $50, 000 per year after taxes, you're earning around $4, 150 per month, and that means your maximum car budget should be around $850 per month.


    Rosalyn Price   |   Member since 2009  |  ✔ Verified

    What cars hold their value the best?

    The Top 10 Cars That Hold Their Value

  • Subaru Impreza WRX: 40.0% The list kicks off with a surprising entry: Subaru's rally-bred WRX.
  • Nissan Frontier: 39.5% The Frontier is comfortably the oldest car on the list.
  • Nissan GT-R: 39.4%
  • Honda Ridgeline: 38.1%
  • Porsche 911: 37.2%
  • Toyota 4Runner: 36.5%
  • Toyota Tundra: 35.9%
  • Toyota Tacoma: 32.0%

  • David Cattell   |   Member since 2016  |  ✔ Verified

    What happens to unsold new cars?

    This Is What Happens to All of the Cars That Never Get Sold. That means they buy new cars from the manufacturer and sell them at a higher price to make a profit. Therefore, once the dealership buys those cars , they belong to them. They can't just send the unsold ones back to the manufacturer at the end of the year.


    Brad Griffiths   |   Member since 2010  |  ✔ Verified

    How much will a dealership come down on price on a used car?

    According to iSeeCars.com, used car dealers cut the price on the average vehicle between one and six times over that 31.5 day listing period. The first price drop is significant -- the firm says that the price drops, on average, by 5% the first time the dealer rips the old sticker off the car and pops a new on.


    Peyton Gaynor   |   Member since 2013  |  ✔ Verified

    How do I get the best price on a new car?

    Here are some of my top cheapskate car-buying tips.

  • Only Buy a Car You Can Pay for With Cash.
  • If You Don't Buy With Cash, Get Preapproved.
  • Do Your Homework and Stay Flexible.
  • Find Out the True Cost of Owning.
  • Rent Before You Buy.
  • Timing Is Key.
  • Look for Older Dealer Inventory.
  • Car-Shop at Membership Warehouse Stores.

  • Emery Janes   |   Member since 2016  |  ✔ Verified

    What should you not say to a car salesman?

    10 Things You Should Never Say to a Car Salesman

  • “I really love this car”
  • “I don't know that much about cars”
  • “My trade-in is outside”
  • “I don't want to get taken to the cleaners”
  • “My credit isn't that good”
  • “I'm paying cash”
  • “I need to buy a car today”
  • “I need a monthly payment under $350”

  • Barney Verdon   |   Member since 2014  |  ✔ Verified

    Is it better to make a large down payment on a car?

    Putting money down on a vehicle has plenty of advantages. The larger the down payment , the lower your monthly payment will be—and you'll probably get a better interest rate, to boot. But if you make a larger down payment , all of those extras are offset, your loan stays above water, and you still have equity in the car .


    Daniel Nelson   |   Member since 2018  |  ✔ Verified

    How much should I spend on a car if I make 100000?

    The general rule of thumb is that you should not spend more than 20% of your monthly take-home pay on cars , according to Edmunds.com (via Bankrate). So if your after-tax monthly income is $4, 000, your total cost of car ownership for ALL of the cars you own should not exceed $800 under this rule.


    Wade Graham   |   Member since 2015  |  ✔ Verified

    How much should I spend on a car if I make 60000?

    Most financial experts agree that your car expenses (monthly payment, insurance, fuel, taxes, routine maintenance and so forth) should be no more than 15 to 20% of your net income. In our $3, 300 example that works out to a maximum of $500 to $660 per month.


    Chuck Mcguire   |   Member since 2014  |  ✔ Verified

    What cars dont depreciate?

    10 Cars That Depreciate the Least

  • 2018 BMW M3. Our list of cars that depreciate the least includes many 2018 models.
  • 2018 Subaru WRX. It's probably no surprise that Subaru offers many cars with low depreciation rates.
  • 2018 Subaru Legacy.
  • 2017 Porsche 718 Cayman.
  • 2017 Porsche 911.
  • 2017 Porsche Panamera.
  • 2018 Ford Mustang.
  • 2018 Honda Fit.

  • Gil Driscoll   |   Member since 2013  |  ✔ Verified

    What are the disadvantages of buying a new car?

    Disadvantages of Buying a New Car

  • More expensive.
  • Immediate depreciation.
  • Unknown reliability for model year.
  • Higher tax and insurance costs.

  • Benjamin Connor   |   Member since 2014  |  ✔ Verified

    What time of year is best time to buy a car?

    Shop late in the year and late in the month The months of October, November and December are the best time of year to buy a car . Car dealerships have sales quotas, which typically break down into yearly, quarterly and monthly sales goals.


    Colleen Gibson   |   Member since 2014  |  ✔ Verified

    How much can you negotiate on a new car?

    Focus any negotiation on that dealer cost. For an average car , 2% above the dealer's invoice price is a reasonably good deal. A hot-selling car may have little room for negotiation , while you may be able to go even lower with a slow-selling model. Salespeople will usually try to negotiate based on the MSRP.


    Charlize May   |   Member since 2011  |  ✔ Verified

    Does it make financial sense to buy a new car?

    No, it never makes sense . It is money spent on status. A used vehicle that is 1-3 years old has the same quality and longevity as a new vehicle , but costs much, much less. Unless you have money to spare, and you understand and are okay with the fact that you are paying for status instead of vehicle , never buy new .


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