Would Dave Ramsey Finance a New Car? 5 Things He Says About Big Auto Purchases
Written by
John Schmoll
Edited by
Jenna Klaverweiden
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A car is often the second-largest purchase most Americans make, and it can cost them a lot of money. Recent data reveals the average price of a new car is $48,699 in June 2025, according to CarEdge. The average price of a used car is roughly half that at $25,547, per CarEdge.
Either is expensive, but personal finance guru Dave Ramsey is on record about how best to handle such purchases, most notably his strong opposition to financing a new car. Here are five things Ramsey has said to keep in mind when you’re in the market for a car.
Avoid Purchasing a New Car
Ramsey regularly preaches to avoid new cars altogether, as they can drag on the finances of most Americans. The reasons are manifold but largely come down to cost and depreciation.
“You don’t want too much of your money tied up in things that depreciate (go down in value). And cars, trucks, and things with motors depreciate big time,” Ramsey said in an X post.
The average used car is roughly half the cost of a new one, allowing you to put funds toward other responsibilities and goals, which aligns with Ramsey’s mentality. Furthermore, new cars lose a significant portion of their value in the first five years of life, up to 60% of their value, according to Carfax.
Pay in Cash If at All Possible
The average monthly car payment is $754, according to Edmunds. And roughly 20% of new car buyers have payments exceeding $1,000. Committing to such a payment is a big no-no to Ramsey. “The best car for you is the car you can afford to pay cash for. You want to own your vehicles, not the other way around,” Ramsey said in another X post.
The reason is simple: It may free you up to invest cash for the long term. “If you paid cash for a reliable, used car and invested that average car payment amount into good mutual funds from age 25 until retirement, you’d have millions in your investments by age 65,” Ramsey added in the tweet.
Paying cash for a car seems impossible, but it beats having a burdensome monthly payment that hinders your budget.
Have a Budget in Mind
Budgeting is key to achieving financial goals in Ramsey’s mind. Purchasing a car is no different. Having a car-buying budget ensures you purchase something you can afford and, hopefully, avoid a large car payment.
“It all starts with a budget. A budget helps you make sure you’re getting a car you can actually afford,” according to an article on the Ramsey Solutions website.
A good way to do this is to save money each month in a high-yield savings account to grow until you have the funds necessary to purchase the car you want.
Don’t Overlook Insurance Costs
It’s easy to forget about auto insurance costs when purchasing a new-to-you car. One reason to avoid a pricey new car is it’s likely going to cost more to insure than a reliable used car, possibly adding hundreds of dollars more to annual costs.
“The truth is, new cars cost more to repair or replace — so they cost more to insure (especially if they come with fancy extras like backup cameras and blind spot sensors). And even with some of the latest safety technology, insurance companies rarely offer discounts to new-car drivers for having those features,” according to an article on the Ramsey Solutions website.
Skip the Extras
Car dealers love to add costly extras like rust-proofing, roof racks or extended warranties. Most simply bloat the total cost unnecessarily.
“These dealer-added extras can increase the price of the car by hundreds of dollars,” per the Ramsey Solutions website. Instead of opting for extras, put the cash in your emergency fund to handle expensive car repairs or other expenses.
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