Never buy a new car unless?

Question

Dave Ramsey said to never buy a new car unless your net worth is at least 1 million dollars. Do you agree with this? I personally thought about it and agree it makes sense.

Answer 1

No, I like new cars and mostly bought them since 1969. Back then your payments lasted 3 years the car lasted 10 years. I have driven used cars and some were a maint pain. I buy a car or truck every 10 years or so and pay cash. Last one was 2008 so maybe another in 2 years if I have a reason. Doesn't really matter what my net worth is. I am a single retired woman and just don't want to deal with it. Mom always had new cars and her net worth was only half a million, but that as debt free so very low cost of living with a decent pension and investment income.

Answer 2

I disagree.



Seventeen years ago I bought a brand new car (the one and only new car I've ever purchased) and I'm STILL driving it. It's been a great car and there's absolutely nothing wrong with it. The only thing I've ever had to repair (other than routine maintenance) is replacing the radiator. I plan to drive this car for another five years at least.



I agree with Dave in that cars are an area where people waste TONS of money. However, I don't think I would have spent less buying and repairing several used cars over 20 years than keeping the one new car I've ever purchased. Sales tax in my state is 10% which really makes buying big things even more unattractive.

Answer 3

Dave is pretty anti-debt and he isn't wrong to be. Cars are hardly a good investment especially new cars. They drop in value so much the moment you drive them off the lot.



I think that unless you are planning on keeping a car for at least 10 years you shouldn't buy a new car even if your net worth is >$1mil unless there is a very good reason.



That said I've done it more than once.

Answer 4

If you buy a secondhand car you can run the risk of buying a sh** box whereas a new car you will know the entire history of the car. Although it is more expensive, it is well worth it. You can get quite good warrantys from the dealerships.



I would not cancel out buying an older car altogether and have in fact on several occasions purchased used cars. There is nothing quite like owning a brand now car

Answer 5

The important things to understand about Ramsey are who his target is and that his advise is geared towards finding the lowest common denominator. His target audience is people who have a history of not being able to control their finances and he wants his message to be ultra-conservative, simple to understand, and something that absolutely anyone can follow. His methods can work for anyone, but it's a message of pure abstinence based on the assumption that you are unable to exert self control and moderate your "consumption" of credit or purchases.



It's no different than telling people that if you don't want to become an alcoholic, you should never have a single drink. It's true that if you never have a drink you'll never become an alcoholic, but it's not true that everyone who has a drink is going to end up an alcoholic. Some people have self control and can moderate, some can't. Those who can't moderate benefit from following a message of abstinence, those who can don't need to.



Bottom line, it's entirely possible to have a net worth <$1M, buy a new car and end up just fine. The people who are capable of pulling it off aren't the ones that Ramsey is trying to speak to.

Answer 6

Can't I make the same argument about buying ANYTHING new? Why not buy used clothes at Goodwill? Why not buy used appliances there as well? If everything goes down in value eventually as newer better items come out, isn't buying anything new subject to devaluation? Shoes? TV? Furniture? The ONLY item that people buy that actually appreciates in value is real estate.

Answer 7

I disagree. I have a net worth over $1 million, and I wouldn't waste any of it on a new car. A three- or four-year -old used car is a much better value for my hard-earned money.

Answer 8

Dave Ramsey got rich spouting stupid stuff. I always buy new. You get the warranty, the newest in safety equipment and technology, have no repair expenses for years, (used cars need tires, brakes, fluid changes, etc), you might get 0% financing, and you can ensure the car is well taken care of, instead of buying someone else's troubles. On the economic side, people took this advice (a decade ago? or so) and General Motors went bankrupt, making their stock worthless, and putting many people out of work (who then (eventually) go on federal unemployment - which is paid for by you the working taxpayer - - so for my money I will have the new car).

Answer 9

Of course it makes sense. Here is another rule, even stronger. You can buy any car you think you can afford to maintain as long as you pay cash for it. I have done this all my life and have a stable of cars worth over $100 thousand when new.

Answer 10

depends on a lot of factors only you can answer



last car i owned cost me 750 (thats right 750)



it was 10 years old when i got it-

kept it 4 years and in those 4 years it cost me 750 in repairs then i scrapped it

so 1500 over 4 years = 400/year



never bothered about minor damage like you do with a new car cos i knew i was gonna scrap it eventually and damage dont change its scrap value)

(somebody drove into the side of it once and dented the door- told them not to bother with insurance and just give us 50 and forget it cos it wasnt worth the hassle filling out insurance forms and taking it to be fixed (i would have taken 25 if they had argued)

(p.........s it was fully insured- funny thing was - it cost less to be fully insured than for collision only)



then i got 200 back from the scrap dealer



how does that compare with getting a new car?



probably cost 400/ year just in servicing (cos most cars you have to have serviced at an authorised garage in order to preserve the warranty)



with mine i allowed 300/year in maintenance+repairs to keep it on the road - more than that i scrap it and get another

so thats say 1000/year maximum cost (you have to be dumb with cars not to be able to judge if it shall last a year without major problems or just unlucky, if you are you get somebody to look it over for you)



it boils down to - do you want the "image" a new car gets you?- or the practicality and economics of an old one?

Answer 11

When you buy a new car, you absorb a large %age of the decreased value when you take possession and drive it off the lot. At that moment, it becomes a used car. The largest depreciation occurs early in the life of the car (as when it is new) vs used.

Answer 12

depends on a lot of factors only you can answer



Last car I owned cost me 750 (thats right 750)



It was 10 years old when I got it-

kept it 4 years and in those 4 years it cost me 750 in repairs then i scrapped it

so 1500 over 4 years = 400/year



Never bothered about minor damage like you do with a new car cos I knew i was gonna scrap it eventually and damage dont change its scrap value)

(somebody drove into the side of it once and dented the door- told them not to bother with insurance and just give us 50 and forget it cos it wasnt worth the hassle filling out insurance forms and taking it to be fixed (I would have taken 25 if they had argued)

(p.s it was fully insured- funny thing was - it cost less to be fully insured than for collision only)



then I got 200 back from the scrap dealer



how does that compare with getting a new car?



probably cost 400/ year just in servicing (cos most cars you have to have serviced at an authorised garage in order to preserve the warranty)



With mine I allowed 300/year in maintenance+repairs to keep it on the road - more than that I scrap it and get another

So thats say 1000/year maximum cost (you have to be dumb with cars not to be able to judge if it will last a year without major problems or just unlucky, if you are you get somebody to look it over for you)



It boils down to - do you want the "image" a new car gets you?- or the practicality and economics of an old one?

Answer 13

Hi

Answer 14

I read where a new car depreciates 20% the minute you drive it off the lot. Can I afford to throw away 5 to 8 thousand dollars for the fleeting pleasure of having a brand new car? I personally can't afford that.

Answer 15

But I want to buy a car.

Answer 16

never buy a new car period - its just moeny down the drain in depreciation- buy a 1 year old car - and you lose less money in depreciation and get an almost used car - no one can afford to pour money down the drain - even if you don't need the money yourself - give it away to someone who does

Answer 17

Considering the depreciation of the car as soon as it's driven off the lot, it makes sense. However, there are so many excellent deals at the end of the year, it's hard to resist.

Answer 18

My motto is "NEVER buy new, let someone else eat the depreciation".

it's not too hard to find "almost new" gently used cars repoed from persons who broke this rule. you'll save thousands.

Answer 19

my motto is "never buy new, let someone else eat the depreciation"...

it's not too hard to find "almost new" gently used cars repoed from persons who broke this rule... you'll save thousands...

Answer 20

if course not

if that were a requirement there would probably not be any car manufacturers around