How Dave Ramsey's Car-Buying Rules Can Protect Your Wealth

The car market sent mixed signals recently. New vehicles averaged $48,641 in March 2025, down from the December 2022 peak of $49,929—but still roughly 26% higher than pre-pandemic levels. That’s why financial experts like Dave Ramsey and Suze Orman are doubling down on a contrarian message: resist the temptation to buy new.

The Math Behind Depreciation

The economics of car ownership are brutal. New vehicles shed approximately 20% of their value during year one alone, and by the five-year mark, they retain just 40% of the original purchase price. This isn’t an investment; it’s a liability in motion.

“Your goal should be to buy the least expensive car—period,” Orman emphasizes. “That reality should push you toward used vehicles.” Dave Ramsey takes the argument further, pointing out that “most millionaires don’t drive flashy cars. When people stop wasting money trying to look wealthy, they actually become wealthy.”

Why New Car Purchases Derail Financial Independence

The real danger of financing a new vehicle isn’t just the monthly payment—it’s the opportunity cost. Every dollar locked into a depreciating asset is a dollar unavailable for wealth-building investments. According to Ramsey Solutions, “The choice between new or used (and how you finance it) determines whether you’re building toward financial independence or spinning your wheels in debt and endless payments.”

A Smarter Strategy for Car Buyers

Dave Ramsey’s rule is straightforward: purchase a reliable, gently used vehicle with cash when possible. This approach accomplishes two things simultaneously—you avoid the steepest depreciation curve while eliminating debt servicing. The money saved compared to financing a new model can be redirected toward actual wealth accumulation.

Ramsey Solutions suggests never financing a new car purchase until your net worth exceeds $1 million. Even then, only consider it if the vehicle represents a negligible percentage of your total assets.

The Takeaway

The next time a salesman pushes the latest model, remember: buying used isn’t settling—it’s strategic. That’s the Dave Ramsey rules for buying a car, and it’s fundamentally about choosing financial freedom over the illusion of status.