Dave Ramsey: Why You Should Always Pay Cash for a Car
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Heather Taylor
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Levi Leidy
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Which car is the best car for you? According to money expert Dave Ramsey, it’s the car you can afford to pay for in cash.
There are more benefits that come with buying a car using only cash than you might think. Here’s why it’s always worth it to pay cash for a car.
It Keeps You From Going Into Debt
One of the strongest arguments in favor of using cash for a car purchase is it keeps you from going into debt.
“Just because you think you ‘deserve’ a specific car doesn’t mean it’s worth going into debt for,” Ramsey tweeted.
A Ramsey Solutions blog post sharing car buying tips said the first step of buying a car is figuring out your budget. How much can you afford to pay? What you can afford, the post reads, should be based on the amount of cash you can pay upfront. Going into debt for a car is not a good idea.
What if you don’t have enough cash to buy a car? According to Ramsey Solutions, you’ll need to figure out how much you can afford to put toward a car fund and set this money aside every month. See if there are any expenses you can cut back on and budget accordingly.
Cash Buyers Can Negotiate
Let’s say there’s a car you want to buy, but it’s a little out of your budget. You can still include it on your list.
“As a cash buyer, you’ll have the power to negotiate a better price,” the post reads on Ramsey Solutions.
How does this work? According to the Ramsey Solutions post, buyers can give the seller a price they’re willing to pay for the car. You want enough room to meet the seller in the middle, so the amount should be lower than what you’re willing to pay. If you see another seller, like a dealership or a third party, selling the same car for a better price, you can bring this information with you during negotiations.
Financing Doesn’t Help You Build Wealth
Those who don’t have enough money for a car may think it’s a smart decision to finance with a loan or lease every month instead. However, according to Ramsey Solutions neither leasing or financing a car helps buyers build wealth.
Instead of putting yourself through an expensive payment plan, the best approach is to save around $500 a month for 10 months and buy a used car.
“All that matters is that your vehicle gets you where you need to go, at least until you can save up for a better one,” Ramsey tweeted.
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