Buying a new car involves multiple major decisions for most Americans, beginning with the process of determining whether one's existing vehicle is due for a replacement.
After that, budget constraints and financial priorities come into play, adding pressure to make a smart selection.
Financial expert and radio personality Dave Ramsey provides guidance — and offers a warning — with a goal of helping car buyers navigate this process wisely and confidently.
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Ramsey encourages car buyers to let go of the idea that there’s a flawless, dream vehicle out there waiting to be discovered. Instead, he stresses the importance of choosing a car that suits one's real-world needs and financial situation.
That starts with asking yourself practical questions — such as whether a car or a truck makes more sense for your lifestyle, how many passengers you typically transport, what kind of fuel efficiency you want, and how much space you need for cargo.
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Ramsey points out the fact that no single vehicle will fulfill every desire. The key is to be honest about what’s truly necessary versus what’s simply a nice-to-have, and to think ahead about how the car will serve you over time.
He also advises taking your time with the search — exploring both traditional dealerships and online listings to get a full view of your options.
Most importantly, don’t rush into the first deal that looks good, Ramsey advises. There may be better choices just around the corner.
But there is one unfortunate car-buying fact about which Ramsey has a warning — and a suggestion to make it work in your favor.
Dave Ramsey warns car buyers on one inescapable fact
Dave Ramsey urges car buyers to start with a dose of realism: Vehicles lose value rapidly — up to 60% within the first five years.
Because of this steep depreciation, he cautions against viewing a car purchase as any sort of investment. In his view, buying a brand-new car is something only those with significant disposable income should even consider.
He advises buyers to begin by finding a quality used car they can genuinely afford.
That involves a big early commitment, Ramsey says, that focuses on the amount of cash one is able to pay up front rather than relying on loans or leases, which he considers poor financial decisions.
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“Remember, leasing or financing a car will not help you build wealth,” Ramsey wrote. “It's much easier to save around $500 a month (the average car payment) for 10 months and buy a used car with no strings attached.”
In general, when it comes to the common debate over leasing or financing, Ramsey is clear: Neither route supports long-term financial health.
He argues it makes far more sense to put aside the equivalent of an average car payment for several months and purchase a quality used vehicle outright — free of debt, interest, and multi-year obligations.
Related: Jean Chatzky sends strong message on buying vs. leasing a car
Dave Ramsey suggests other key tips for buying a car
Ramsey advises prospective car buyers to conduct a hands-on inspection — even without mechanical expertise — before making a purchase.
He suggests paying attention to simple but telling details such as fluid levels, including oil, coolant, transmission, and brake fluid. On the vehicle’s exterior, he recommends examining the paint, tire wear, lights, and doors for signs of damage or neglect.
Inside, Ramsey recommends checking for wear on the seats, steering wheel, and pedals, along with making sure all doors lock properly. Functional heating and air conditioning are also important to test, and the temperature gauge should be observed while the car idles to catch any overheating issues.
He embraces the step of taking the vehicle for a test drive to assess how it handles both smooth and uneven roads. Pay attention to how the engine sounds during acceleration and listen for any unusual noises when braking, he urges.
Before finalizing any deal, Ramsey advises bringing in a trusted mechanic for a thorough inspection — either at a garage or with a mobile service.
Lastly, Ramsey underscores the importance of negotiating the price with confidence. Paying in cash, he notes, offers the leverage needed to secure a better deal with less pressure.
Related: Tony Robbins sends strong message to Americans on 401(k)s
